Fitch Updates Ratings on Multiple Aircraft EETC Subordinated Tranches

CHICAGO—(BUSINESS WIRE)—Fitch Ratings has updated the ratings for multiple enhanced equipment trust certificates (EETC) subordinated tranches to reflect the updated ratings criteria which was published on Sept. 12, 2013. A full rating list is shown below.

The following ratings have been affirmed:

Air Canada 2013-1 Pass Through Trust:

—Class B certificates at ‘BB+’;

-Class C certificates at ’BB’.

Hawaiian Airlines 2013-1 Pass Through Trust:

—Class B certificates at ‘BB’.

US Airways 2012-1 Pass Through Trust:

—Class B certificates at ‘BB+’.

US Airways 2012-2 Pass Through Trust:

—Class B certificates at ‘BB+’.

US Airways 2013-1 Pass Through Trust:

—Class B certificates at ‘BB+’.

United Airlines Pass Through Trust Series 2013-1

—Class B certificates at ‘BB+’.

Based on the application of Fitch’s updated criteria, the following rating has been upgraded:

British Airways Pass Through Trust Series 2013-1

-Class B certificates to ‘BBB’ from ’BBB’.

Rationale:

The one notch upgrade reflects Fitch’s expectation that the British Airways 2013-1 B tranche would receive superior recovery in a potential liquidation scenario.

Based on the application of Fitch’s updated criteria, the following ratings have been downgraded:

US Airways 2012-1 Pass Through Trust:

-Class C certificates to ‘B+’ from ’BB’.

US Airways 2012-2 Pass Through Trust

-Class C certificates to ‘B+’ from ’BB’.

The one notch downgrade of the US Airways C tranches reflects a recalibration of Fitch’s ratings based on the newly incorporated recovery component of the subordinated tranche methodology. In a potential liquidation scenario where the aircraft are rejected and repossessed, Fitch expects the C-tranche holders would experience minimal recovery. Notching for these two tranches now consists of a 2 notch adjustment for a high-to-moderate affirmation factor and a -2 notch adjustment based on expected recovery, and the ratings are now equal to US Airways’ IDR of ’B’.

The update to the criteria does not impact Fitch’s view on the underlying credit quality of US Airways. US Airways’ IDR remains ‘B+’, Outlook Positive.

Criteria Update:

Fitch’s revised methodology incorporates a recovery component into the subordinated tranche ratings process and breaks up the prior maximum four notch uplift from the affirmation factor into two components, including the presence of a liquidity facility. Ratings are assigned through a three step approach:

1) Between 0-3 notches of uplift are applied based on the affirmation factor (i.e. the likelihood that the airline will affirm the aircraft in a bankruptcy scenario).

2) One notch of uplift is assigned for the inclusion of a liquidity facility. In most cases, EETC B tranches will include a liquidity facility, whereas C tranches will not.

3) Fitch then incorporates a recovery analysis. For B tranches, Fitch may choose to assign one additional notch of uplift (for a maximum potential of 5 notches from the underlying IDR) in cases where the expected recovery is well above average compared to similar transactions.

For C tranches, Fitch generally expects recovery to be minimal. Therefore, Fitch will generally adjust the ratings downward by 1-2 notches based on Fitch’s Corporates recovery criteria.

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

Applicable Criteria and Related Research:

—‘Rating Aircraft Enhanced Equipment Trust Certificates’ ‘Sept. 12, 2013’;

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

Applicable Criteria and Related Research:

Rating Aircraft Enhanced Equipment Trust Certificates

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=717763

Recovery Ratings and Notching Criteria for Non-Financial Corporate Issuers

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