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Rating Action:

Moody's assigns ratings to United Air Lines 2009-2A and 2009-2B EETCs

16 Nov 2009

Approximately $810 million of pass through certificates rated

New York, November 16, 2009 -- Moody's Investors Service assigned Ba1 and B1 ratings, to the about $698 million of Class A and the about $112 million of Class B Pass Through Certificates, respectively, of the 2009-2 Pass Through Trusts (the "Class A Certificates" and "Class B Certificates" or collectively, the "Certificates") to be issued by United Air Lines, Inc. ("United"). The transaction documentation provides for the possible issuance of one additional subordinated tranche of certificates. The subordination provisions of the inter-creditor agreement provide for the payment of interest on the Class B Certificates before payments of principal on the Class A Certificates. Amounts due under the Certificates will, in any event, be subordinated to any amounts due on either of the Class A or Class B Liquidity facilities, each of which provides for three consecutive semi-annual interest payments due the respective Certificate holders.

The Class A Equipment Notes and Class B Equipment Notes (the "Notes") issued by United and acquired with the proceeds of the Certificates will be the sole assets of the Pass Through Trusts. The Certificates' proceeds will fund the refinancing of United's 2000-2 Enhanced Equipment Trust Certificates ("EETC's") maturing in 2011. UAL Corporation (Caa1 Corporate Family Rating, negative outlook) will guarantee United's obligations under the Notes Indentures.

Rating Rationale

The ratings of the Certificates consider the credit quality of United as obligor under the Notes, Moody's opinion of the collateral protection of the Notes, the credit support provided by the Liquidity Facilities, and certain structural characteristics of the Notes such as the cross-collateralization and cross-default provisions and the protections of Section 1110 of Title 11 of the United States Code (the "Code"). The assigned ratings of Ba1 and B1 on the Class A and Class B tranches, respectively, reflect Moody's opinion of the ability of the Pass Through Trustees to make timely payment of interest and the ultimate payment of principal at a date no later than January 15, 2017 for the A tranche and January 15, 2016 for the B tranche, each the final expected distribution dates. "Same as for United's 2009-1 EETC, Moody's believes that since the majority of the aircraft types that comprise this transaction are core to United's mainline operations and fleet strategy, it is likely that United would affirm its obligations under the Equipment Notes in the event of its reorganization," said Moody's Analyst Jonathan Root. Additionally, the cross-collateralization of the aircraft securing each note underlying the transaction enhances the potential recovery for investors in the event of a default by the Pass Through Trusts of their respective Certificate obligations or of the rejection of the aircraft by United in the event of a bankruptcy event and pursuant to the provisions of the Code.

Any combination of future changes in the underlying credit quality or ratings of United, material unexpected changes in the value of the aircraft pledged as collateral, and/or changes in the status or terms of the liquidity facilities or the credit quality of the liquidity provider could cause Moody's' to change its ratings of the Certificates.

General Structure of the Series 2009-2 EETC's

The proceeds of the Certificates will initially be held in escrow and deposited with the Depositary, JPMorgan Chase Bank, N.A. (short-term rating of P-1), until the issuance of each of the thirty-seven equipment notes upon the refinancing of the 2000-2 EETC. The interest on these funds will be sufficient to pay accrued interest on the outstanding Certificates during the Deposit Period.

The collateral pool consists of 37 aircraft: twelve A319-100's, five A320-100's, three B757-200's, four B757-200ETOPS, three B777-200's, seven B777-200ER's and three B747-400's.

The Certificates issued to finance the aircraft are not obligations of, nor are they guaranteed by United. However, the amounts payable by United under the Notes will be sufficient to pay in full all principal and interest on the Certificates when due. The Notes will be secured by a perfected security interest in the aircraft. It is the opinion of counsel to United that the Notes will be entitled to benefits under Section 1110 of the U.S. Bankruptcy Code. Under Section 1110 of the U.S. Bankruptcy Code, if United fails to pay its obligations under the Notes, the collateral trustee has the right to repossess any aircraft which have been rejected by United. Scheduled interest payments on the Certificates will be supported by the respective liquidity facilities sized to pay up to three respective consecutive semi-annual interest payments in the event United defaults on its obligations under the Notes. The liquidity facility does not provide for payments of principal due, nor interest on the Certificate proceeds held in escrow during the Deposit Period. The provider of each of the liquidity facilities is Goldman Sachs Bank USA. The Goldman Sachs Group, Inc. (Moody's short-term rating of P-1), will guarantee Goldman Sachs Bank USA's obligations under the Revolving Credit Facilities for each of the A and B tranches. The liquidity provider has a priority claim on proceeds from liquidation of the Equipment Notes and other Trust collateral ahead of any of the holders of the Certificates and is also the controlling party following default.

Cross-Collateralization

The ratings of the 2009-2 Certificates benefit from the cross-collateralization of the Notes, a feature which Moody's believes can enhance recovery in the event of a default. The structure provides that, in the event any or all aircraft are sold, any surplus proceeds are made available to cover shortfalls due under the Notes related to the sale of any of the other aircraft. Importantly, all surplus proceeds are retained until maturity of the Equipment Notes financing or the indentures are cancelled. All Notes held by the Subordination Agent will be cross-subordinated such that payments received on the B certificates will be applied in order of the priorities set out in the Intercreditor Agreement.

Moody's considers the number of aircraft and the number of different aircraft models that comprise the collateral pool when assessing the amount of LTV benefit of a cross-collateralized EETC structure. The large number of aircraft and aircraft types in the transaction result in a meaningful LTV benefit. That the included models are integral to United's short- and long-haul routes support the likelihood of affirmation by United of its obligations under the related equipment notes, thus minimizing the probability of the cross-collateralization benefit being called upon by creditors over the life of the transaction.

The principal methodology used in rating United is Moody's Global Passenger Airlines, published in March 2009 and available on www.moodys.com in the Rating Methodologies sub-directory under the Research & Ratings tab. Other methodologies and factors that may have been considered in the process of rating United can also be found in the Rating Methodologies sub-directory on Moody's website.

The last rating action was on October 5, 2009 when Moody's assigned a Ba1 rating to United's 2009-1A EETC.

Assignments:

..Issuer: United Air Lines, Inc.

....Senior Secured Enhanced Equipment Trust, Assigned B1

....Senior Secured Enhanced Equipment Trust, Assigned Ba1

United Air Lines, Inc. and its parent UAL Corporation are based in Chicago, Illinois. United is one of the largest passenger airlines in the world.

New York
Michael J. Mulvaney
Managing Director
Corporate Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

New York
Jonathan Root
Vice President - Senior Analyst
Corporate Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's assigns ratings to United Air Lines 2009-2A and 2009-2B EETCs
No Related Data.
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