Fitch: U.S. Airline Legal Maneuverings Create New Risks for Airport Bondholders.

Business Editors

NEW YORK--(BUSINESS WIRE)--July 21, 2003

For the first time in more than a decade, a prominent rating factor for U.S. airport bonds has become the willingness of U.S. airlines to honor leases and contracts while under financial stress, according to a new report published today by Fitch Ratings. Fitch is especially concerned by bankrupt airlines that are pursuing legal strategies in bankruptcy court that would effectively divert revenues away from airport bondholders.

'Fitch Ratings is following bankruptcy court decisions closely to see whether major rating actions for U.S. airport bonds need to be taken,' said Jim Gilliland, director, Fitch Ratings. 'If bankruptcy courts rule in favor of airlines in landmark cases, these rulings could set an extraordinary precedent.'

In the new report, Fitch notes that bankruptcy rulings are currently relevant in all three classes of airport bonds - general airport revenue bonds (GARBS), special facility bonds and passenger facility charge (PFC) bonds - and cites examples involving carriers US Airways and United Airlines as well as John F. Kennedy International Airport, Pittsburgh International Airport, Denver International Airport, Chicago O'Hare International Airport and others.

'Bankruptcy courts are empowered with very wide latitude to take actions that are deemed necessary to facilitate the successful reorganization of a bankrupt entity,' said Gilliland. 'Also, in bankruptcy, airlines have the ability to reject certain contracts and cancel contractual obligations that are no longer advantageous for the reorganizing airline's ongoing business.'

The new report 'Airline Bankruptcies and Airport Bonds: 2003-2006' can be found on the Fitch Ratings web site at 'www.fitchresearch.com' by linking to the 'Public Finance' sector and clicking on 'Special Reports'.