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US Airways remains on credit watch negative-S&P
Friday February 6, 12:18 pm ET
(The following statement was released by the rating agency)
NEW YORK, Feb 6 - US Airways Group Inc. (NasdaqNM:UAIR - News; B-/Watch Neg/--) today reported a fourth-quarter 2003 net loss of $98 million, compared with a net loss of $794 million in the year-earlier fourth quarter. Standard & Poor's Ratings Services said its ratings on US Airways Inc., which were lowered to current levels Jan. 9, 2004, remain on CreditWatch with negative implications. The fourth-quarter 2003 results benefited from gains on the sale of investments, while the fourth-quarter 2002 period included unusual bankruptcy-related charges. Excluding these items, the company narrowed its pretax loss to $129 million from $352 million, reflecting cost reductions achieved in Chapter 11 and an improved revenue environment. Still, results remain unsatisfactory and behind original plans, particularly given the considerable restructuring implemented in bankruptcy during 2002 and 2003.
The most important near-term issue for US Airways remains securing covenant relief from the Air Transportation Stabilization Board on the company's federally guaranteed credit facility. Management stated that it "will take any actions necessary to meet" those covenants, and is exploring major asset sales to raise funds that could be used to partly pay down that loan. Ratings will be lowered if such covenant relief is not achieved, while success in those negotiations would buy time for US Airways to seek further cost concessions from labor and pursue other expense initiatives. Unrestricted cash of $1.29 billion at Dec. 31, 2003, as a percentage of revenues is about average among major U.S. airlines. Long-term prospects remain difficult, given the company's limited route network and increasing exposure to low-cost competition. Accordingly, acquisition by another airline or some other form of close integration into a broader alliance remains the best ultimate solution for US Airways.
Friday February 6, 12:18 pm ET
(The following statement was released by the rating agency)
NEW YORK, Feb 6 - US Airways Group Inc. (NasdaqNM:UAIR - News; B-/Watch Neg/--) today reported a fourth-quarter 2003 net loss of $98 million, compared with a net loss of $794 million in the year-earlier fourth quarter. Standard & Poor's Ratings Services said its ratings on US Airways Inc., which were lowered to current levels Jan. 9, 2004, remain on CreditWatch with negative implications. The fourth-quarter 2003 results benefited from gains on the sale of investments, while the fourth-quarter 2002 period included unusual bankruptcy-related charges. Excluding these items, the company narrowed its pretax loss to $129 million from $352 million, reflecting cost reductions achieved in Chapter 11 and an improved revenue environment. Still, results remain unsatisfactory and behind original plans, particularly given the considerable restructuring implemented in bankruptcy during 2002 and 2003.
The most important near-term issue for US Airways remains securing covenant relief from the Air Transportation Stabilization Board on the company's federally guaranteed credit facility. Management stated that it "will take any actions necessary to meet" those covenants, and is exploring major asset sales to raise funds that could be used to partly pay down that loan. Ratings will be lowered if such covenant relief is not achieved, while success in those negotiations would buy time for US Airways to seek further cost concessions from labor and pursue other expense initiatives. Unrestricted cash of $1.29 billion at Dec. 31, 2003, as a percentage of revenues is about average among major U.S. airlines. Long-term prospects remain difficult, given the company's limited route network and increasing exposure to low-cost competition. Accordingly, acquisition by another airline or some other form of close integration into a broader alliance remains the best ultimate solution for US Airways.
