DL & AAI up 6.25/7.50% in anticipation of UAIR bad news tomorrow

[lowecur]

Wall St feels that UAIR will have no viable long term investors tomorrow....they may be right.

If that's the case, the judge will entertain outside reorganization offers after 3/31/05. If there are any takers, this could be the key date for UAIR.

 

[General Lee]

I thought Mesa was going to throw some money that way...?


Bye Bye--General Lee

 

[lowecur]

Not unless JO comes up with a backer. UAIR needs at least $1B to outlast any future investments in DL and UAL. If JO does show his face, it's my guess it will be after 3/31/05(or more likely 4/15/05 when extended by the Judge) when outside investors are allowed to offer their own plan.

 

[jetdawg]

since I am not totally up to speed on what you are talking about with UAIR. could you fill me in on the possible bad news that you are talking about. I remember something about the 3/15 but not sure the full details.

 

[lowecur]

since I am not totally up to speed on what you are talking about with UAIR. could you fill me in on the possible bad news that you are talking about. I remember something about the 3/15 but not sure the full details.

That's the date the company was supposed to present their reorganization plan to the judge. It's my understanding it has been extended to 3/31/05(and more likely extended again until 4/15/05). It should include any investors that back the reorganization plan. It is my guess with oil where it is, plus the fact that outside investors have no faith in the management team, no one will offer a viable finance package.

After 3/31/05(or 4/15/05, if the Judge goes along with GECAS extension), outside companies can make a proposal to the court for their own reorganization plan, and this must include their financial backers. This should be the interesting date to watch, and will determine if UAIR goes 7.

 

[Dizel8]

Not to worry, they will get another extension for the POR!

 

[furloughfodder]

Why does this seem to be happening so fast at USAir, while UAL has floundered in Chap 11 for nearly 3 years now with no reorganization plan whatsoever, and no plans to emerge from Chap 11 any time soon?

 

[lowecur]

Why does this seem to be happening so fast at USAir, while UAL has floundered in Chap 11 for nearly 3 years now with no reorganization plan whatsoever, and no plans to emerge from Chap 11 any time soon?

UAL is next on the docket. They have enough cash to last a little while longer, and have been told by a few Wall St. Bankers that there will be $2.5B in exit financing if certain goals are met. The pilot pension issue will need to be settled shortly for them to have any chance of survival. A UAIR chapt 7 will help them a little, but the big beneficiaries will be DL, AAI, and to some extent CAL. It will definitely help FLYi, but it will be close as to whether they will survive. Oh yeah, did I mention Jetblue and SWA.

 

[chperplt]

You mean 2.5B in exit financing, right?

 

[lowecur]

You mean 2.5B in exit financing, right?

Yes, I'll correct that. Thanks.

 

[SWA/FO]

What does "Planebusiness" have to say about all this?

 

[D-Bo]

Why does this seem to be happening so fast at USAir, while UAL has floundered in Chap 11 for nearly 3 years now with no reorganization plan whatsoever, and no plans to emerge from Chap 11 any time soon?

Happening at USAir so fast? What? This is USAirs second time in BK in the past four years. They went in the first time before UAL. They were out of it for less than a year. Airlines of the past have been in BK for much more time than these two airlines. Anyway, I'll answer your question. It can take longer than you may have hoped because their creditors feel it would be better for them to keep them around from now instead of leeting them go C7. Always been that way. Nothing new. If the creditors feel they can make out fanancially better by throwing some more cash at it they will. That's whats going on here. Thats how it works.

D-Bo

 

[Andy]

Lowecur, it looks like that $125 mil that Wexford is putting into U will keep them alive a bit longer.

 

[BeCareful!]

The East Coast Energizer Bunny Rides Again!!!!!!!!!!!!
MDA Pilots in search of Soft Landing, film at eleven.






- Agreement with Republic Airways Holdings, Inc., and Wexford Capital LLCAlso Includes Options for $110 Million in Financing for Additional Liquidity



ARLINGTON, Va., March 14 /PRNewswire-FirstCall/ -- US Airways Group, Inc. announced today that it has reached an agreement with Republic Airways Holding, Inc., (Republic) (Nasdaq: RJET - News) and its majority shareholder, Wexford Capital LLC, on an equity and financing package that includes a $125 million investment upon US Airways' emergence from Chapter 11, in addition to options for obtaining $110 million of other liquidity enhancements that would be available prior to emergence to assist the airline in completing its restructuring.

Terms of the agreement are being filed with the U.S. Bankruptcy Court for the Eastern District of Virginia in Alexandria. US Airways will seek the court's approval at the next monthly omnibus hearing scheduled for its case, which is set for Thursday, March 31, 2005, at 9:30 a.m., Eastern time.

Wexford is based in Greenwich, Conn., and holds a majority interest in Republic, which operates Chautauqua Airlines and Republic Airlines. The proposed $125 million equity investment is contingent on US Airways securing a total of $350 million in new cash investment (including the $125 million from Republic and the $125 million previously secured from Eastshore Aviation, LLC) to finance the US Airways Plan of Reorganization and other conditions, including Republic being satisfied with US Airways' business plan. The agreement also provides for comparable treatment -- such as representation on the US Airways board of directors -- as that provided to Eastshore. The agreement also includes a commitment by US Airways to amend and restate its existing jet service agreement with Chautauqua, to assume that agreement and to enter into a new jet service agreement with Republic for regional jet feed using the Embraer (EMB) 170 and 190 aircraft under the US Airways Express brand.

"We are very pleased to have secured the support of a second, well- regarded investor and airline partner to help us build and finance our plan of reorganization," said Bruce R. Lakefield, US Airways president and chief executive officer. "The Republic management team has a proven track record and we look forward to an expanded relationship. We are well on our way to securing at least $350 million in new capital and continue to finalize our business plan that will leverage our competitive cost structure and strong market positions in the eastern U.S. and the Caribbean."

"We appreciate all of the hard work US Airways and its employees have accomplished thus far. We recognize there is more work to be completed but we are pleased we are able to assist US Airways in reaching the final phase of its reorganization process," said Bryan Bedford, chairman, president, and CEO of Republic Airways Holdings.

In addition to the equity investment, the agreement includes options for additional financing for US Airways subject to the consent and approval of the Air Transportation Stabilization Board (ATSB). Those provisions include:

* Prior to the effective date of US Airways' plan of reorganization, but no later than Dec. 31, 2005, US Airways may exercise its option to obtain approximately $110 million through the sale of certain assets, including ten EMB-170 aircraft currently owned by US Airways and the three EMB-170 aircraft currently committed for delivery to US Airways; other EMB 170 related assets, such a flight simulator and other items; and 113 commuter slots at Ronald Reagan Washington National Airport; and 24 commuter slots at New York's LaGuardia airport. In addition, US Airways will assign to Republic the leases for an additional 15 EMB-170 aircraft. Republic would also work with US Airways to locate an Embraer heavy maintenance facility at an agreed upon location within the US Airways network. Republic would enter into a regional jet service agreement that would continue the operation of the aircraft as US Airways Express. In addition, Republic would simultaneously lease back the slots to US Airways. At any time on or after the second anniversary of the slots sale/leaseback agreement, US Airways will have the right to repurchase the LaGuardia and Washington slots at a predetermined price. * After the effective date of US Airways' Chapter 11 plan of reorganization, in the event that US Airways does not exercise the slots sale/leaseback option, Republic has an option to purchase/assume debt and leases for all 28 EMB-170 aircraft and to fly them as US Airways Express. The net effect, should this portion of the agreement be implemented, would be the sale of US Airways' MidAtlantic aircraft to Republic. If either option is exercised, Republic will comply with the applicable provisions of all existing agreements with US Airways regarding MidAtlantic Airways. Customers will not be impacted, as the EMB-170 aircraft that currently comprise the MidAtlantic fleet will continue to fly under the US Airways Express brand, but will be operated by Republic.



"This transaction provides us with new equity, reduced debt, enhanced liquidity, and a strengthened relationship with a key regional airline partner, as well as efficiencies in running the business that will allow us to focus more of our resources on the mainline operations," said Lakefield. "Overall, we will have both flexibility and a stronger regional jet network that will improve both our bottom line and service to our customers." In light of this new equity commitment and substantial progress being made in US Airways' restructuring, General Electric's GECAS subsidiary and other affiliates have agreed to US Airways' request to extend the date by which the company will file its Plan of Reorganization until April 15, 2005.

 

[lowecur]

Lowecur, it looks like that $125 mil that Wexford is putting into U will keep them alive a bit longer.

$125M can be used for exit financing only. They can tap the $110M for liquidity purposes all the way up to 12/31/05.

UAIR will need to muster up an additional $100M in exit financing in order to get the $125M. From what I understand, the reorganization hearing will be on 3/31/05(and probably extended to 4/15/05 to match GECAS), not tomorrow.

Well, it looks like Wall St was wrong, again.