Moody's puts US Airways on review

Moody's Investors Service put US Airways, Inc., Piedmont Aviation and ETC Repackaging Trust 1998-1 on review for possible downgrade, affecting $3.2 billion of debt. The action affects US Airways' equipment trust certificates, enhanced equipment trust certificates, industrial revenue bonds currently rated Caa2, Piedmont Aviation's passthrough certificates and ETC Repackaging Trust Series 1998-1. Insured industrial revenue bonds and those rated C were not put on review and neither were insured enhanced equipment trust certificates.

Moody's said the review was prompted by the continued weak financial performance of US Airways, its stated need to restructure its cost base in order to effectively compete and the potential negative implications for debt holders, including the possibility of further restructuring or rejection of equipment obligations as part of any cost reduction efforts.

For the aircraft-backed deals, Moody's will assess the degree to which current ratings adequately reflect risk to debt holders including the support provided for equipment financings by the current value of aircraft collateral in relation to debt outstanding and the adequacy of payments to equipment trusts, some of which have been renegotiated.

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