S&P cuts Air 2 US

Standard & Poor's downgraded AIR 2 US LLC's enhanced aircraft notes including cutting series A to BB- from BBB-, series B to B- from B, series C to CCC- from B- and series D to CC from CCC+. All ratings remain on CreditWatch negative.

The downgrade of Air 2 US notes reflects the likelihood that ongoing negotiations to restructure leases to United Air Lines will materially reduce cash flows available to repay the notes, S&P said. Although the reduced lease rentals may be sufficient, along with contracted payments from American Airlines, to repay one or more classes of more senior notes, excess cash flow coverage may be significantly reduced.

Although American Airlines narrowly avoided bankruptcy in April 2003, it appears that it would either return the planes that it leases from Air 2 US or seek significantly reduced rental rates if it were to enter Chapter 11 in the future.

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