A US bankruptcy court has agreed to the Retirement Scheme of Alabama (RSA) throwing US Airways a $300 million lifeline to keep the airline operating until December, by which time it must finalise new financing and submit a restructuring plan.
RSA has offered US Airways $500 million debtor-in-possession (DIP) emergency financing, of which the court has agreed to make an interim $225 million available for day-to-day expenses and another $75 million to repay earlier DIP funding by Credit Suisse First Boston and Bank of America. The latter was made available in conjunction with Texas Pacific Group's $200 million bidlast month for a 37.5% stake in US Airways once it emerges from Chapter 11.
"Texas Pacific Group has allowed US Airways to terminate its agreement to pursue a higher offer from the RSA...We will continue to watch the company... with interest," says the Fort Worth-based private equity firm. RSA now becomes US Airways' preferred backer with a $240 million offer to take the same size equity position, coupled with a $1 billion collateralised loan.
The Air Transportation Stabilization Board (ATSB) will back the loan with a $900 million guarantee conditional on the carrier reorganising its finances and re-emerging from Chapter 11. The airline is working on a restructuring plan.
US Airways has also agreed a marketing tie-up with United Airlines, now undergoing regulatory review. United, which has its own battle to avoid Chapter 11, has asked staff for $9 billion in wage cuts over the next six years, plus an additional $1 billion saving. Unions have offered savings of $5 billion over five years. Hinging on this is a $1.8 billion loan guarantee from the ATSB, which has demanded concessions in return for keeping United out of Chapter 11.
Source: Flight International
