S&P: US Airways still on developing watch

Standard & Poor's said that its ratings on US Airways Group., including the B- corporate credit ratings on US Airways Group and its major operating subsidiaries America West Holdings Corp., America West Airlines Inc. and US Airways Inc., remain on CreditWatch with developing implications, where they were initially placed on Nov. 15.

On Jan. 10, US Airways revised its proposal to merge with Delta Air Lines Inc. (rated D), under which both companies would combine upon Delta's emergence from bankruptcy, expected in the first half of 2007, the agency said.

The revised proposal, for which US Airways already has $8.2 million of committed financing, compared to $7.2 million in the previous proposal, would provide $10 billion in cash and stock to Delta's unsecured creditors, an approximate 19% increase over the previous proposal, the agency said.

The combination would result in one of the world's largest airlines and US Airways still estimates annual revenue/cost synergies of $1.7 billion when fully phased in over a two-year period, S&P noted.

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