Reuters: Financial Services and Real Estate: TEXT-S&P rates US Airways Inc.'s 2012 pass-thru certificates classes A-C

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TEXT-S&P rates US Airways Inc.'s 2012 pass-thru certificates classes A-C May 14th 2012, 13:35 Mon May 14, 2012 9:35am EDT May 14 - Standard & Poor's Ratings Services today said that it assigned its 'BBB' (sf) rating to Tempe, Ariz.-based US Airways Inc.'s 5.9% $379.785 million series 2012-1 Class A pass-through certificates, with an expected maturity of Oct. 1, 2024. At the same time, we assigned our 'B+' (sf) rating to the 8% $124.958 million Class B pass-through certificates, with an expected maturity of Oct. 1, 2019. We assigned our 'B' (sf) rating to the 9.125% $118.636 million Class C pass-through certificates, with an expected maturity of Oct. 1, 2015. The final legal maturities on the A and B classes will be 18 months after the expected maturity. The issues are drawdowns under a Rule 415 shelf registration. "We base the 'BBB'(sf), 'B+'(sf), and 'B' (sf) ratings on US Airways' credit quality, substantial collateral coverage by good quality aircraft, and on legal and structural protections available to the pass-through certificates," said Standard & Poor's credit analyst Betsy Snyder. The company will use the proceeds of the offering to refinance two A321-200 aircraft delivered in 2009, and 12 A321-200 aircraft to be delivered in September 2012-March 2013. Each aircraft's secured notes are cross-collateralized and cross-defaulted, a provision that we believe increases the likelihood that US Airways would affirm the notes (and thus continue to pay on the certificates) in bankruptcy. The pass-through certificates are a form of enhanced equipment trust certificates (EETCs) and benefit from legal protections afforded under Section 1110 of the federal bankruptcy code. Natixis S.A. (A/Stable/A-1) provides a liquidity facility intended to cover up to three semiannual interest payments on the A and B classes, a period during which certificateholders could repossess and remarket collateral following any default by the airline, or to maintain continuity of interest payments as certificateholders negotiate with US Airways in a bankruptcy. The ratings apply to a unit consisting of certificates representing the trust property and escrow receipts, initially representing interests in deposits (the proceeds of the offerings). Natixis S.A. holds the escrow deposits until US Airways pays off existing debt on the planes (which the company should accomplish by May 2012). Amounts deposited under the escrow agreements are not property of US Airways and are not entitled to the benefits of Section 1110 of the U.S. Bankruptcy Code. Any default arising solely because of a cross-default provision may not be of a type required to be cured under Section 1110. Any cash collateral held as a result of the cross-collateralization of the equipment notes also would not be entitled to the benefits of Section 1110. Neither the certificates nor the escrow receipts may be separately assigned or transferred. Link this Share this Digg this Email Reprints

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