USAFRICA AIRWAYS is optimistic that it will be able to restart services early in 1996 following the signing of a marketing pact with Continental Airlines and bankruptcy court approval for a refinancing package.
USAfrica began serving South Africa in June 1994 from Washington, but it ceased operations and filed for Chapter 11 bankruptcy protection in February after suffering cash flow problems.
The airline has now received bankruptcy-court permission to go ahead with a $15 million refinancing from new investors. President Gregory Lewis says that the plan is to resume flights by April at the latest.
Under the refinancing package scheme, US charter carrier Tower Air will acquire a 27% stake in the airline, while a New-York-based investment group, the Smith Management Company, will take another 54%. Creditors and secured investors will hold the rest of the stock.
The financing is dependent on US Africa retaining its route rights, but Lewis is confident that, with the promise of fresh cash, it will now be able to satisfy the US Department of Transportation (DoT) rules on financial fitness.
In September the DoT decided tentavley to re-allocate the seven South African frequencies to World Airways and Southern Air Transport, but a court order gave US Africa a stay of execution until January 1996.
Tower will provide the operation with either a Boeing 747-100 or -200 on wet lease, as well as handling sales and marketing.
The airline will initially fly between Continental's Newark International hub and Johannesburg, with an intermediate stop in Dakar, Senegal. Lewis says, that feed traffic now being provided by Continental, is paramount to the operation, adding that delays in completing a pact with United Airlines scuttled US Africa's launch in 1994.
Source: Flight International
