Opening Share Price Of Lcc?

[BoeingBoy]

S&P rates debt which basically relates to how creditworthy they view the company. The lower the rating, the greater the chance that the company will default on debt payments, at least in the view of S&P.

It won't affect the company directly as far as existing debt goes, but it could affect the interest rate if we need to borrow more money - say to finance airplanes.

Jim

 

[BoeingBoy]

Here's the story with an updated headline:

S&P may downgrade US Airways; completing America West review (LCC)

By Carla Mozee

SAN FRANCISCO (MarketWatch) -- Standard & Poor's Ratings Services on Tuesday assigned a B- corporate credit rating to US Airways Group (LLC) and its US Airways Inc. subsidiary following the company's merger with America West Holdings Corp. It placed the rating on creditwatch with negative implications, pending completion of America West's creditwatch review. America West's rating remains on creditwatch with negative implications. "The combined entity will face significant hurdles, particularly integration of its labor forces," S&P credit analyst Betsy Snyder said in a statement. "However, the company will benefit from stronger liquidity following new equity investments and loans, and a more extensive route network." Resolution of the creditwatch is expected to occur within the next week and will focus on the combined entity's expected operational and financial performance.

Jim

 

[BoeingBoy]

If I get a chance (ok - if I get around to it), I'll check but I think either the new ATSB agreement or GE MOU (maybe both) requires a B- credit rating. If my memory is accurate (always questionable), we're standing on the edge - a downgrade could put us in default.

Jim

 

[tahitigirl]

What do you mean default? We just started today!

 

[BoeingBoy]

Before I crawl any further out on this limb, let me check to see if my memory is accurate....

Jim

 

[hp_fa]

**If** Boing Boy is correct, can someone tell me how all the genius finance people could have missed this possibly happening right off the bat?

 

[BoeingBoy]

The only thing I've found so far is a clause in the GE agreement letting them take 10 737's back early if we don't achieve a [redacted] credit rating by 9/31/2006 (next year this time) as well as a provision in the Airbus agreement that references interest rates on the loan they're providing to credit rating [again, nothing specific].

So forget everything I said - perhaps I was thinking back to the original ATSB agreement from BK1.

Sorry for the confusion.....

Jim 😳

 

[BoeingBoy]

And for anyone that hasn't seen....

LCC closed at $19.30, with a high of $21.40 (a few minutes after the first trade) and a low of $19.10 (presumably near the close of trading).

Jim

 

[EricLv2Fish]

S&Ps news of a possible downgrade in credit rating may have induced the drop in price toward the end of closing.