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S&P cuts US Airways ratings
Standard & Poor's said it lowered its ratings on US Airways Group Inc. and its US Airways Inc. subsidiary, including lowering the corporate credit ratings to CCC+ from B-, and removed all ratings from CreditWatch, where they were placed on Dec. 10.
The outlook is negative.
S&P said the downgrade was based on the difficult challenge faced by US Airways as it seeks to rapidly lower its operating expenses in response to mounting pressure from low-cost competitors. The company is seeking further major cost-saving concessions from its labor groups, who already took pay cuts in 2002 and 2003, and failure to conclude those negotiations successfully over the next several quarters could force US Airways to undertake significant asset sales and/or file for bankruptcy a second time.
S&P said ratings on US Airways Inc.'s various enhanced equipment trust certificates, excepting those that are insured, were lowered, as well. Downgrades were in most cases more extensive than the one-notch downgrade of US Airways' corporate credit rating, reflecting decreased confidence that the airline would be able to reorganize successfully if it were to enter a second bankruptcy proceeding. These obligations are, however, mostly backed by modern technology Airbus aircraft that are considered good collateral.
S&P lowered US Airways Inc.'s equipment trust certificates to B- from B+ and pass-through certificates series 1998-1A to BBB- from BBB+, series 1998-1B to B+ from BB+, series 1998-1C to CCC+ from B, series 1999-1A to BBB- from BBB+, series 1999-1B to B+ from BB+, series 1999-1C to CCC+ from B, series 2000-3C to B- from B, and series 2001-1C to B- from B.
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