NEW YORK, June 3 - Standard & Poor's said today it raised its corporate credit ratings on America West Holdings Corp. (AWA) and subsidiary America West Airlines Inc. to single-'B'-minus from triple-'C'-minus and removed them from CreditWatch, where they were placed Sept. 13, 2001. Ratings on unsecured debt and various pass-through certificates were also raised. The outlook is negative. "Ratings have been raised due to the America West's improved liquidity after receipt of proceeds from a $429 million loan backed by the federal government, and expected improving financial performance as it benefits from over $600 million in concessions received in conjunction with the federal loan guarantee," said Standard & Poor's credit analyst Betsy Snyder. Although the company's liquidity has been enhanced, the company's fate will still depend on the expected recovery in the airline industry. If it is weaker than expected and/or another terrorist attack occurs, ratings could be lowered. Ratings on America West reflect risks relating to the adverse airline industry environment, a weak balance sheet, and limited financial flexibility, since it has no bank facilities and almost 90% of its assets are encumbered. These are offset somewhat by the company's relatively low operating costs, among the lowest in the industry. America West Holdings' major subsidiary is America West Airlines Inc., the eighth-largest airline in the U.S, with hubs located at Phoenix, Ariz., Las Vegas, Nev., and Columbus, Ohio. America West benefits from a low cost structure, among the lowest in the industry. However, it competes at Phoenix and Las Vegas against Southwest Airlines Co., the other major low-cost, low-fare operator in the industry and financially the strongest. As a result, due to the competition from Southwest, as well as America West's reliance on lower-fare leisure travelers, its revenues per available seat mile also tend to be among the lowest in the industry. In addition, America West Holdings owns the Leisure Company, one of the nation's largest tour packagers. Ratings also reflect the adverse airline industry environment in which America West operates, which tends to be competitive and cyclical. The industry began to experience declining traffic levels and pressure on pricing in early 2001 due to a softening economy, trends that were exacerbated by the events on Sept. 11, 2001, and from which the industry will likely not recover fully until 2003. This resulted in a deterioration in America West's liquidity, which almost caused it to file for Chapter 11 bankruptcy protection. However, in January 2002, the company received proceeds from a $429 million loan that was guaranteed by the federal government under the Air Transportation Stabilization Act. As part of this process, the company completed arrangements for over $600 million in concessions, financing, and other assistance. These actions should enable it to maintain its relatively low cost structure relative to the industry and return to profitability when airline revenues recover. However, the company's financial flexibility is expected to remain weak. Although it had $421 million of cash and short-term investments at March 31, 2002, it has no bank facilities and almost 90% of its assets are encumbered. A weaker-than-expected recovery in the airline industry and/or another terrorist attack could hinder America West's recovery, either of which could result in a downgrade. A complete list of the ratings is available to RatingsDirect subscribers at www.ratingsdirect.com, as well as on Standard & Poor's public Web site at www.standardandpoors.com under Ratings Actions/Newly Released Ratings. ©2002 Reuters Limited.