$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
