U.S. Approves US Airways Loan Guarantee
Tuesday February 11, 4:12 pm ET
By John Crawley
WASHINGTON (Reuters) - US Airways Group Inc. (Other OTC:UAWGQ.PK - News) won government approval on Tuesday for a $900 million loan guarantee that is critical to the carrier's bid to reorganize under bankruptcy protection.
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The airline must meet several new conditions before the Air Transportation Stabilization Board will activate the guarantee to underpin $1 billion in private financing.
The conditions include finalizing concession deals, obtaining final bankruptcy court approval of its reorganization proposal, and regulatory and judicial clearance of its plan to eliminate its pilot's union retirement plan.
The three-member board, which voted unanimously to approve the application, also said it reserved the right to decline the assistance if the airline's financial prospects worsen or its ability to repay the loan diminishes.
The board's executive director, Daniel Montgomery, said in a letter to the airline that it had presented a business plan that "reasonably positions" the company to "meet the challenges and risks of this industry and to achieve financial stability over the term of the proposed loan."
The US Airways bid was conditionally approved last July just weeks before the Arlington, Virginia-based carrier filed for bankruptcy protection.
At that time, the board demanded substantial cost cuts and a stake in the No. 7 U.S. airline.
As part of reorganization, the stabilization board accepted US Airways' plan to give the government warrants to buy 10 percent of the company. US Airways also plans to cut annual costs by $1.8 billion.
US Airways plans to emerge from Chapter 11 protection by March 31.
"We are gratified by the (government) action today, and its vote of confidence in our company's restructuring and prospects for long-term success," David Siegel, the airline's president and chief executive, said in a statement.
David Bronner, chief executive of the airline's lead investor, Retirement Systems of Alabama, said the new conditions were anticipated.
"Now we just have to go through it and make sure that we meet all of the guidelines," Bronner said.
The stabilization board was set up after the 2001 hijack attacks to help financially struggling airlines with loan guarantees. (Additional reporting by Julie MacIntosh in New York)
Tuesday February 11, 4:12 pm ET
By John Crawley
WASHINGTON (Reuters) - US Airways Group Inc. (Other OTC:UAWGQ.PK - News) won government approval on Tuesday for a $900 million loan guarantee that is critical to the carrier's bid to reorganize under bankruptcy protection.
ADVERTISEMENT
The airline must meet several new conditions before the Air Transportation Stabilization Board will activate the guarantee to underpin $1 billion in private financing.
The conditions include finalizing concession deals, obtaining final bankruptcy court approval of its reorganization proposal, and regulatory and judicial clearance of its plan to eliminate its pilot's union retirement plan.
The three-member board, which voted unanimously to approve the application, also said it reserved the right to decline the assistance if the airline's financial prospects worsen or its ability to repay the loan diminishes.
The board's executive director, Daniel Montgomery, said in a letter to the airline that it had presented a business plan that "reasonably positions" the company to "meet the challenges and risks of this industry and to achieve financial stability over the term of the proposed loan."
The US Airways bid was conditionally approved last July just weeks before the Arlington, Virginia-based carrier filed for bankruptcy protection.
At that time, the board demanded substantial cost cuts and a stake in the No. 7 U.S. airline.
As part of reorganization, the stabilization board accepted US Airways' plan to give the government warrants to buy 10 percent of the company. US Airways also plans to cut annual costs by $1.8 billion.
US Airways plans to emerge from Chapter 11 protection by March 31.
"We are gratified by the (government) action today, and its vote of confidence in our company's restructuring and prospects for long-term success," David Siegel, the airline's president and chief executive, said in a statement.
David Bronner, chief executive of the airline's lead investor, Retirement Systems of Alabama, said the new conditions were anticipated.
"Now we just have to go through it and make sure that we meet all of the guidelines," Bronner said.
The stabilization board was set up after the 2001 hijack attacks to help financially struggling airlines with loan guarantees. (Additional reporting by Julie MacIntosh in New York)
