BRENDAN SOBIE / WASHINGTON DC
General Electric and The Retirement Systems of Alabama emerge as key backers of stricken carrier's bid for survival
US Airways hopes to secure bankruptcy court approval this week which will allow it to complete its financial and fleet restructuring by the end of March.
A federal bankruptcy court will review the carrier's reorganisation plan at a 16 January hearing. The airline hopes to amend leases on aircraft and airport gates, enter into new loans and finance a new fleet of regional jets. General Electric, one of US Airways' largest creditors, has emerged as a key backer of the reorganisation plan, agreeing to lend US Airways $480 million, reduce lease rates on 36 Boeing aircraft and provide $350 million in new regional jet financing.
The plan depends on shedding excess aircraft, lowering lease rates on remaining aircraft and acquiring new regional jets. The carrier has already returned over 30 mainline aircraft to reach its new fleet size of 279 aircraft and hopes to secure court approval next week for lease amendments on most of its 150 remaining Boeing aircraft. US Airways is proposing to lease its 737-300s and 737-400s at $90,000 a month and 757-200s at $175,000 a month.
Lease agreements on all 129 of its newer Airbus aircraft are not being revised. But US Airways is proposing to amend leases on most of the 100 Bombardier Dash 8s operated by its regional subsidiaries. It is proposing new monthly rates of $20,000 per month for Dash 8-100s and $30,000 a month for longer-range Dash 8-200s.
US Airways will also launch a new regional jet subsidiary. GE has agreed to provide $350 million to cover an unspecified number of new Bombardier CRJ or Embraer 170 family aircraft that will be operated by this subsidiary.
US Airways is also expanding its own regional jet fleet through new commitments with partner carriers, beginning with Midway Airlines, which relaunched operations earlier this month with the first of 18 CRJ200s.
Pending bankruptcy court approval, GE will also provide $120 million in debtor-in-possession (DIP) financing and another $360 million upon US Airways' emergence from bankruptcy. These loans are on top of the $500 million in DIP funding from The Retirement Systems of Alabama (RSA), the main sponsor of the reorganisation. RSA has also agreed to loan US Airways another $240 million after its emergence from bankruptcy protection.
US Airways last week revealed it lost another $118 million, pushing its losses for the first 11 months of 2002 just over $1 billion. Standard & Poor's says the new GE deal, by providing more funds at a critical juncture, "advances the airline's efforts to emerge from bankruptcy".
Source: Flight International
