Fitch Rates United Continental's Sr. Unsecured Notes 'B-'

CHICAGO—(BUSINESS WIRE)—Fitch Ratings has assigned a rating of ‘B-/RR5’ to United Continental Holdings, Inc.‘s (UAL) $300 million unsecured notes due 2020. Fitch currently rates UAL and its primary operating subsidiary, United Airlines, Inc. at ’B’ with a Positive Outlook.

The $300 million unsecured notes have been issued by United Continental Holdings, Inc., and are guaranteed by United Airlines, Inc. The new notes will rank equally in right of payment with United Airlines’ existing and future unsecured debt. United expects to utilize the proceeds for general corporate purposes.

The ‘B-/RR5’ rating is assigned based on Fitch’s recovery expectations under a scenario in which distressed enterprise value is allocated to various debt classes. The ‘RR5’ (11% – 30% recovery) category reflects Fitch’s expectations that the United unsecured creditors would receive some principal recovery after United’s substantial secured indebtedness is satisfied. Some of United’s other unsecured obligations remain in the ‘RR6’ category reflecting either contractual or structural subordination.

RATING SENSITIVITIES

Fitch generally views UAL’s credit profile as improving; however, progress is still required to warrant an upgrade of the IDR. A positive action could be considered if the company were to improve its operating margins, exhibit improving FCF, and continue to pay down debt. Fitch notes that United has underperformed the industry in recent months in terms of traffic and operating margins. Visible progress towards improving operating results and exhibiting further merger related benefits would also be viewed as credit positives.

A negative rating action is not anticipated at this time, but potential negative ratings triggers include a fuel or demand shock related to broader macroeconomic issues, or further operational issues which constrain growth and drive negative FCF.

Fitch has assigned the following ratings:

United Continental Holdings, Inc.

$300 million senior unsecured notes ‘B-/RR5’

Fitch currently rates United as follows:

United Continental Holdings, Inc.

—IDR ‘B’;

—6% senior unsecured convertible notes due 2029 ‘CCC+/RR6’.

United Airlines, Inc.

—IDR ‘B’;

—Secured bank credit facility ‘BB/RR1’;

—Senior secured notes ‘BB/RR1’;

-Senior unsecured rating ’B/RR5’

—Junior subordinated convertible debentures ‘CCC+/RR6’.

Additional information is available at ‘www.fitchratings.com’

Applicable Criteria and Related Research:

—‘Corporate Rating Methodology’ (Aug. 5, 2013);

—‘Recovery Ratings and Notching Criteria for Nonfinancial Corporate Issuers’ (Nov. 13, 2012).

Applicable Criteria and Related Research:

Corporate Rating Methodology – Effective from 8 August 2012 – 5 August 2013

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=684460

Recovery Ratings and Notching Criteria for Non-Financial Corporate Issuers

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=693773