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Rating Action:

Moody's rates US Airways' Series 2012-1 EETC, A-tranche at Ba2

30 Apr 2012

$623.4 million of enhanced equipment trust certificates rated

New York, April 30, 2012 -- Moody's Investors Service assigned Ba2, B2 and B3 ratings, respectively, to the Class A, Class B and Class C Pass Through Certificates, Series 2012-1 (the "Certificates") of the 2012-1 Pass Through Trusts that US Airways, Inc. ("US Airways") will establish. Moody's affirmed the Caa1 Corporate Family and Probability of Default ratings assigned to US Airways Group, Inc. and other of its ratings assigned to the company's debt or equipment trust certificates. Moody's also downgraded its ratings assigned to certain of US Airways or America West Airlines, Inc.'s Enhanced Equipment Trust Certificates ("EETCs") due to its estimates of weakening loan to values. The downgrades are reflected in the accompanying debt list. Issuer: US Airways, Inc.

..Assignments:

....Series 2012-1 Enhanced Equipment Trust

Class A Certificates Assigned Ba2

Class B Certificates Assigned B2

Class C Certificates Assigned B3

..Downgrades:

....Series 2001-1 Enhanced Equipment Trust

Class G Certificates to B1 from Ba3

..LGD Assessments:

....Senior Secured Term Loan B, Changed to LGD3, 36% from LGD3, 38%

....Senior Unsecured Revenue Bonds, Changed to LGD5, 87% from LGD5, 89%

Issuer: America West Airlines, Inc.

..Downgrades:

....Series 1998-1 Enhanced Equipment Trust

Class A Certificates to Ba3 from Ba1

Class B Certificates to B3 from B1

....Series 1999-1 Enhanced Equipment Trust

Class G Certificates to B1 from Ba3

....Series 2000-1 Enhanced Equipment Trust

Class G Certificates to B1 from Ba3

RATINGS RATIONALE

The proceeds of the Series 2012-1 Certificates will fund the purchase of equipment notes to be issued by US Airways for 14 aircraft: two Airbus A321-200s originally delivered to US Airways in 2009 and twelve new Airbus A321-200 aircraft to be delivered in 2012 or 2013. Existing financing on the two 2009 aircraft will be refinanced by this transaction. The payment obligations of US Airways will be guaranteed by its parent, US Airways Group, Inc. Amounts due under the respective Certificates will be subordinated to any amounts due on the separate Class A and Class B Liquidity Facilities ("Liquidity Facility"). Natixis, S.A., acting through its New York Branch ("Natixis") will provide each of the liquidity facilities for the Class A and Class B Certificates. There will not be a liquidity facility for the C-Tranche. Natixis will also serve as the Depositary.

The ratings of the Certificates consider the credit quality of US Airways as obligor of the underlying equipment notes, Moody's opinion of the collateral protection of the Notes, the credit support provided by the liquidity facilities, the applicability of Section 1110 of Title 11 of the United States Code (the "Code") to the equipment notes, and certain structural characteristics of the Certificates such as the cross-collateralization and cross-default features. The assigned ratings reflect Moody's opinion of the ability of the Pass-Through Trustees to make timely payment of interest and the ultimate payment of principal on the final scheduled regular distribution date of October 1, 2024.

Moody's estimate of the loan-to-value of the Certificates is in line with those of US Airways' Series 2010-1 and Series 2011-1 EETCs. Moody's estimates the initial loan-to-value of the tranches at above 60%, 80% and 95%, respectively based on its estimates of market values and before applying its LTV benefit for cross-collateralization. Notably, unlike the recent US Airways' predecessor transactions, Series 2012-1 will not finance any wide-body aircraft. Moody's believes that the inclusion of wide-body aircraft, particularly new deliveries, strengthens the probability of a Section 1110(a) election under a reorganization scenario. Nevertheless, the ratings assignment for 2012-1 reflects the relatively high probability of affirmation under a reorganization scenario. The aircraft in the 2012-1 EETC will be the youngest in the airline's fleet. Additionally, this aircraft model is likely to be a stalwart in US Airways' fleet for years to come, with its higher gauge and ability to replace the B757-200s the company operates. Moody's applied a one percentage point LTV benefit for cross-collateralization because of the relatively few aircraft of only one type.

Any combination of future changes in the underlying credit quality or ratings of US Airways, unexpected material changes in the market value of the A321-200 aircraft 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.

The affirmation of the Caa1 Corporate Family and Probability of Default ratings considers the company's adequate liquidity, weak credit metrics and ongoing headwinds from elevated fuel prices. The ratings also reflect potential event risk with US Airways' recent announcement that it has reached agreements with certain of the labor unions that presently represent certain of the workgroups at American Airlines, Inc. ("American", rating withdrawn). This was done as part of US Airways attempt to have the Committee of Unsecured Creditors of American Airlines (in bankruptcy) put forth a competing plan of reorganization that would contemplate a merger with US Airways.

The downgrade of the ratings on the previously issued US Airways and AWA EETC's reflects Moody's belief that the market values of older A320 family aircraft that comprise the collateral of these financings have meaningfully declined. In particular, the market values of the A319 (the smaller variant of Airbus' A320 family) have faced pressure over the past year, reflecting weakened demand and lease rates for these airplanes relative to the competing Boeing model, the B737-700. Moody's notes that the impending introduction of competing-gauge airplanes (COMAC's C919, Irkut's MS-21) as well as the re-engined Airbus NEO and Boeing MAX models later this decade will likely continue to cause downward pressure on the values of the older-technology Airbus airplanes flying with less fuel efficient engines.

The principal methodology used in rating US Airways was the Global Passenger Airlines Industry Methodology published in March 2009 and Enhanced Equipment Trust And Equipment Trust Certificates published in December 2010. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Please see the Credit Policy page on www.moodys.com for a copy of these methodologies.

US Airways Group, Inc., based in Tempe, Arizona, through its subsidiaries, operates one of the largest airlines in the U.S. with service throughout the U.S. as well as Canada, Mexico, Europe, the Middle East, the Caribbean, Central and South America.

REGULATORY DISCLOSURES

The Global Scale Credit Ratings on this press release that are issued by one of Moody's affiliates outside the EU are endorsed by Moody's Investors Service Ltd., One Canada Square, Canary Wharf, London E 14 5FA, UK, in accordance with Art.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the Moody's office that has issued a particular Credit Rating is available on www.moodys.com.

For ratings issued on a program, series or category/class of debt, this announcement provides relevant regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides relevant regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides relevant regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

Information sources used to prepare the rating are the following : parties involved in the ratings, parties not involved in the ratings, public information, confidential and proprietary Moody's Investors Service information, and confidential and proprietary Moody's Analytics information.

Moody's considers the quality of information available on the rated entity, obligation or credit satisfactory for the purposes of issuing a rating.

Moody's adopts all necessary measures so that the information it uses in assigning a rating is of sufficient quality and from sources Moody's considers to be reliable including, when appropriate, independent third-party sources. However, Moody's is not an auditor and cannot in every instance independently verify or validate information received in the rating process.

Please see the ratings disclosure page on www.moodys.com for general disclosure on potential conflicts of interests.

Please see the ratings disclosure page on www.moodys.com for information on (A) MCO's major shareholders (above 5%) and for (B) further information regarding certain affiliations that may exist between directors of MCO and rated entities as well as (C) the names of entities that hold ratings from MIS that have also publicly reported to the SEC an ownership interest in MCO of more than 5%. A member of the board of directors of this rated entity may also be a member of the board of directors of a shareholder of Moody's Corporation; however, Moody's has not independently verified this matter.

Please see Moody's Rating Symbols and Definitions on the Rating Process page on www.moodys.com for further information on the meaning of each rating category and the definition of default and recovery.

Please see ratings tab on the issuer/entity page on www.moodys.com for the last rating action and the rating history.

The date on which some ratings were first released goes back to a time before Moody's ratings were fully digitized and accurate data may not be available. Consequently, Moody's provides a date that it believes is the most reliable and accurate based on the information that is available to it. Please see the ratings disclosure page on our website www.moodys.com for further information.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Jonathan Root
VP - Senior Credit Officer
Corporate Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Michael J. Mulvaney
MD - Corporate Finance
Corporate Finance Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's rates US Airways' Series 2012-1 EETC, A-tranche at Ba2
No Related Data.
© 2019 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.

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