S&P: US Airways EETCs developing

Standard & Poor's said it placed its ratings on enhanced equipment trust certificates (EETCs) of US Airways Group Inc. unit US Airways Inc. (both rated D) on CreditWatch with developing implications following the announcement that America West Holdings Corp. (B-/Watch negative/--) has reached an agreement to acquire US Airways.

The CreditWatch listing does not apply to AAA rated EETCs, which are insured by bond insurers and whose ratings are affirmed. The D corporate credit ratings on US Airways Group and US Airways are not affected, as they are determined by the companies' bankruptcy proceedings; new corporate credit ratings will be assigned upon emergence from Chapter 11 reorganization.

Resolution of the CreditWatch review of EETCs will be based on the credit quality of the new consolidated entity, the credit of US Airways Inc. (which will continue to operate as a separate subsidiary over the intermediate term), the perceived importance of the aircraft collateral backing each EETC to the new company, and on particular aspects (e.g., level of overcollateralization) of each individual EETC. Based on these considerations, S&P said it appears that ratings will be either affirmed or upgraded, with downgrades seen as less likely.

Ratings on CreditWatch developing include US Airways Inc.'s pass-through certificates series 1998-1A at BB+, series 1999-1A at BB+, series 1998-1B at CCC+, series 1999-1B at CCC+, series 1998-1C at CCC-, series 1999-1C at CCC-, series 2000-3C at CCC-, and series 2001-1C at CCC-.

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