Fitch affirms US Airways

Fitch Ratings said it affirmed US Airways Group, Inc.'s issuer default rating at CCC, secured term loan rating at B/RR1 and senior unsecured rating at CC/RR6 and revised the outlook to stable from positive.

The revision in outlook follows the airline's announcement that it made an unsolicited offer to merge with Delta Air Lines, Inc., which has been operating in Chapter 11 bankruptcy protection since September 2005. US Airways' offer totals $8 billion and consists of $4 billion in cash and 78.5 million shares of US Airways common stock, valued at $4 billion. Fitch said US Airways has arranged $7.2 billion in committed financing from Citigroup to fund the cash portion of the transaction, as well as to refinance $1.25 billion in outstanding term loan obligations at US Airways and $1.9 billion in debtor-in-possession financing currently outstanding at Delta.

US Airways estimates that the merger will produce $1.65 billion in annual synergies. Fitch said that although achievement of synergy benefits has historically been difficult in airline mergers, the relative success of the US Airways/America West merger lends credence to the synergy estimates and to management's ability to successfully combine the Delta and US Airways operations.

The agency added that the merged company would be highly levered, however, carrying over $20 billion of lease-adjusted debt.

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