S&P: Northwest Airlines on watch

Standard & Poor's said it placed its ratings on equipment trust certificates and enhanced equipment trust certificates of Northwest Airlines Corp. unit Northwest Airlines Inc. (both B/negative/--) on CreditWatch negative as part of a broader airline industry review of aircraft-backed debt.

The CreditWatch review is prompted by S&P's concern that a prolonged difficult airline industry environment, characterized by high fuel prices, excess capacity and intense price competition in the domestic market, has weakened the financial condition of almost all U.S. airlines and increased the risk of widespread simultaneous bankruptcies.

In such a scenario, which S&P said could be triggered by renewed terrorism, a further spike upward in fuel prices, or a need by airlines to shed costly pension liabilities, holders of aircraft-backed debt could be less willing or able to enforce their claims to full repayment from bankrupt airlines.

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