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Dear Chuck and all Council 70 Flying Partners,
FYI: In the News
Take Care and Fly Safe,
Mollie
McCarthy
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US
Air satisfies terms of GE financing deal
By John Crawley
WASHINGTON, Jan 14 (Reuters) - US Airways <UAIRQ.OB> has satisfied crucial terms of a new aircraft financing agreement with its biggest creditor, General Electric Co. <GE.N>, that will boost the airline's chances of surviving bankruptcy, both companies said late on Friday.
The agreement is a cornerstone of US Airways' reorganization under Chapter 11 and factors heavily into its plan to emerge as a leaner airline operating more like a low-cost carrier.
The deal requires US Airways to step out of court protection by June 30.
Eric Jones, a GE spokesman, confirmed that US Airways had found $100 million in new cost savings by Friday night's deadline to satisfy terms of the deal struck in November.
A Virginia bankruptcy judge approved the package in December.
While the GE deal gives US Airways important breathing room during bankruptcy, it does not assure its successful emergence. US Airways must still manage market uncertainties, including high fuel prices, soft revenues and brutal competition from rivals, including low-cost carriers, that would welcome its demise.
US Airways is also seeking up to $250 million in new equity investments and long-term labor peace.
General Electric's aircraft financing arm has agreed to defer potentially crippling aircraft lease and debt payments to help save US Airways $140 million during the remainder of its stay in Chapter 11.
GE also will lease up to 31 regional jets to US Airways over the next three years. US Airways hopes to rely more on regional jets.
In exchange, US Airways will return 25 aircraft over the same three-year period, including Airbus <EAD.PA> and Boeing Co. <BA.N> jets through 2007.
Failure to nail down savings or find $100 million in equity by Friday's deadline could have scuttled the agreement and thrown the carrier's restructuring into doubt. GE could have decided to take back aircraft it leases to US Airways, which number more than 100.
US Airways spokesman David Castelveter confirmed the airline had satisfied GE's requirements but would not disclose the source or sources of liquidity.
Creditors like GE and the government's Air Transportation Stabilization Board, which controls access to loans serving as the only source of ready cash for the airline, hold enormous sway over US Airways' prospects for reorganization.
On
Thursday, the airline and the stabilization board reached an agreement
that grants US Airways continued access to cash from the balance of $1
billion in government-backed loans granted in 2003. The agreement
received bankruptcy court approval. |