S&P rates Southwest Airlines notes A-

Standard & Poor's said it assigned its A- rating to Southwest Airlines Co.'s $400 million (BBB+/stable) senior secured notes due 2011.

The notes were placed privately, the agency said, adding that the rating is based on Southwest's BBB+ corporate credit rating, legal protections afforded noteholders under Section 1110 of the U.S. Bankruptcy Code, and collateral protection provided by B737-700 aircraft.

"We analyze these notes as a form of airline equipment trust certificate, as they qualify for Section 1110 protection [which provides, among other things, that secured creditors can repossess aircraft collateral if a bankrupt airline does not come current on its debt service, and agree to perform subsequently, within 60 days of filing for Chapter 11]," said credit analyst Philip Baggaley.

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