Fitch rates US Airways convertibles C, revises other ratings

Fitch Ratings said it assigned a C/RR6 rating to US Airways Group, Inc.'s new 7.25% senior unsecured convertible notes due 2014, changed the ratings on its senior secured credit facility to B+/RR1 from B/RR1 and its senior unsecured debt to C/RR6 from CC/RR6 and affirmed the issuer default rating at CCC.

The agency no longer has an outlook on the company. The outlook had been negative.

The proceeds from the new notes will be used for general corporate purposes.

Fitch said US Airways' ratings reflect ongoing concern regarding the airline's liquidity position over the medium term, especially given the potential for prolonged weakness in demand driven by the global recession. In addition, with a relatively large stream of new aircraft deliveries due over the next several years, most of which are likely to be financed, the agency expects cash obligations tied to aircraft debt service requirements to rise.

The revisions to the credit facility and senior unsecured debt ratings follow recent changes to Fitch's ratings definitions. The agency said its updated ratings definitions specify that for an issuer with an issuer default rating of CCC, issuances with a recovery rating of RR6 are assigned a rating of C - previously it could be CC or C - and issuances with a recovery rating of RR1 are rated B+ - previously it was B.

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