Space Wrangler
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- Joined
- Apr 21, 2004
- Posts
- 101
AND EVEN MORE GOOD NEWS.............................
TEXT-S&P cuts US Airways corporate credit rating
August 20, 2004 10:21:00 AM ET
(The following statement was released by the rating agency)
NEW YORK, Aug 20 - Standard & Poor's Ratings Services today lowered its ratings on US Airways Group Inc. (UAIR) and its US Airways Inc. subsidiary, including lowering the corporate credit ratings of both entities to 'CCC' from 'CCC+'. The outlook is negative. The rating action reflects an increasing risk that crucial labor negotiations will not be completed successfully by Sept. 30, after which the airline could be in default under its federally guaranteed loan, financing arrangements for regional jet deliveries could be withdrawn, and a credit card processor could demand added cash collateral. In addition, the company faces pension payments of $133 million during the second half of 2004, a substantial portion of which is due Sept. 15. According to media reports, US Airways Group's Chairman, David Bronner, said on Aug. 18 that the airline's unions must agree to wage concessions by mid-September or the company would face bankruptcy and could well be liquidated. Ratings on senior classes of enhanced equipment trust certificates, which are either bond insured or well collateralized, were not lowered.
"The lack of progress in labor talks and dwindling time in which agreements must be reached indicate a substantial and increasing risk of bankruptcy in the near term," said Standard & Poor's credit analyst Philip Baggaley. US Airways' pilots are in active negotiations with management, but talks with other labor groups are less advanced. The company has said that it expects to be in violation of certain financial covenants under its federally guaranteed loan following third-quarter 2004 financial results, and would accordingly need to seek another waiver or amendment from the Air Transportation Stabilization Board (ATSB). Likewise, General Electric Capital Corp. (GECC) (AAA/Stable/A-1+) and regional jet manufacturers providing financing for new deliveries of regional jets have waived covenant violations linked to credit ratings through Sept. 30, but may not extend them further without significant progress in labor talks. That financing could not likely be replaced and the regional jets are important to US Airways' turnaround plan.
Liquidity is constrained; unrestricted cash totaled $975 million at June 30, 2004, but is likely to decline as the airline enters the seasonally weak period following Labor Day. The company faces pension payments of $133 million during the second half of 2004, a substantial (but undisclosed) portion of which is due Sept. 15. US Airways announced on Aug. 16, 2004, that it will ask the IRS for permission to reschedule $67.5 million of upcoming minimum pension payments relating to the 2004 plan year. If the request is granted, the company could offset $28.6 million of that amount against the 2003 plan year amounts that are due Sept. 15, 2004.
Failure to make rapid progress toward needed labor concessions could prompt a further downgrade. In addition, covenant violations or moves toward out-of-court debt restructuring could lead to a downgrade. Complete ratings information is available to subscribers of RatingsDirect, Standard & Poor's Web-based credit analysis system, at www.ratingsdirect.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com; under Credit Ratings in the left navigation bar, select Find a Rating, then Credit Ratings Search. REUTERS
"US Airways announced on Aug. 16, 2004, that it will ask the IRS for permission to reschedule $67.5 million of upcoming minimum pension payments relating to the 2004 plan year. If the request is granted, the company could offset $28.6 million of that amount against the 2003 plan year amounts that are due Sept. 15, 2004."
I guarantee that this close to the election Bush will make sure that happens -- UAIR equals 28,000 votes, plus NC and PA are huge swing states this time.
TEXT-S&P cuts US Airways corporate credit rating
August 20, 2004 10:21:00 AM ET
(The following statement was released by the rating agency)
NEW YORK, Aug 20 - Standard & Poor's Ratings Services today lowered its ratings on US Airways Group Inc. (UAIR) and its US Airways Inc. subsidiary, including lowering the corporate credit ratings of both entities to 'CCC' from 'CCC+'. The outlook is negative. The rating action reflects an increasing risk that crucial labor negotiations will not be completed successfully by Sept. 30, after which the airline could be in default under its federally guaranteed loan, financing arrangements for regional jet deliveries could be withdrawn, and a credit card processor could demand added cash collateral. In addition, the company faces pension payments of $133 million during the second half of 2004, a substantial portion of which is due Sept. 15. According to media reports, US Airways Group's Chairman, David Bronner, said on Aug. 18 that the airline's unions must agree to wage concessions by mid-September or the company would face bankruptcy and could well be liquidated. Ratings on senior classes of enhanced equipment trust certificates, which are either bond insured or well collateralized, were not lowered.
"The lack of progress in labor talks and dwindling time in which agreements must be reached indicate a substantial and increasing risk of bankruptcy in the near term," said Standard & Poor's credit analyst Philip Baggaley. US Airways' pilots are in active negotiations with management, but talks with other labor groups are less advanced. The company has said that it expects to be in violation of certain financial covenants under its federally guaranteed loan following third-quarter 2004 financial results, and would accordingly need to seek another waiver or amendment from the Air Transportation Stabilization Board (ATSB). Likewise, General Electric Capital Corp. (GECC) (AAA/Stable/A-1+) and regional jet manufacturers providing financing for new deliveries of regional jets have waived covenant violations linked to credit ratings through Sept. 30, but may not extend them further without significant progress in labor talks. That financing could not likely be replaced and the regional jets are important to US Airways' turnaround plan.
Liquidity is constrained; unrestricted cash totaled $975 million at June 30, 2004, but is likely to decline as the airline enters the seasonally weak period following Labor Day. The company faces pension payments of $133 million during the second half of 2004, a substantial (but undisclosed) portion of which is due Sept. 15. US Airways announced on Aug. 16, 2004, that it will ask the IRS for permission to reschedule $67.5 million of upcoming minimum pension payments relating to the 2004 plan year. If the request is granted, the company could offset $28.6 million of that amount against the 2003 plan year amounts that are due Sept. 15, 2004.
Failure to make rapid progress toward needed labor concessions could prompt a further downgrade. In addition, covenant violations or moves toward out-of-court debt restructuring could lead to a downgrade. Complete ratings information is available to subscribers of RatingsDirect, Standard & Poor's Web-based credit analysis system, at www.ratingsdirect.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com; under Credit Ratings in the left navigation bar, select Find a Rating, then Credit Ratings Search. REUTERS
"US Airways announced on Aug. 16, 2004, that it will ask the IRS for permission to reschedule $67.5 million of upcoming minimum pension payments relating to the 2004 plan year. If the request is granted, the company could offset $28.6 million of that amount against the 2003 plan year amounts that are due Sept. 15, 2004."
I guarantee that this close to the election Bush will make sure that happens -- UAIR equals 28,000 votes, plus NC and PA are huge swing states this time.
