US Airways Defaults on Airport Bonds


Aug 22, 2002
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[P]From the South Florida Business Journal:[BR][BR]US Airways Defaults on Airport Bonds[BR][BR]Alexandria, Va.-based US Airways Group (NYSE: U) has defaulted on $82.1 million of bonds for its terminal space at Boston''s Logan International Airport, according to a letter from the bonds'' trustee, State Street Bank and Trust Co. [/P]
[P]US Airways, which filed for Chapter 11 bankruptcy protection in August and operates 17 gates at Logan, didn''t make required payments to its debt-service reserves for special-facility revenue bonds issued in 1996 and 1999, the bank said. [/P]
[P]Logan airport operator the Massachusetts Port Authority issued the bonds, which are backed by lease payments and insured by MBIA financial company. [/P]
[P]MBIA has not made any payments, and MBIA does not anticipate any losses, said spokeswoman Elizabeth James. [/P]
[P]State Street Bank is not taking action for now, according to the letter, which was issued to bondholders, Massport and MBIA by E. Decker Adams, a State Street vice president in Boston. Adams did not return calls. [/P]
[P]On Nov. 1, US Airways told State Street it would not replenish the reserves, according to State Street''s letter. The letter also notes US Airways has until March 1 to make its next rent payment. [/P]
[P]US Airways spokesman David Castelveter said because the airline is in bankruptcy, it must pay its post-filing bills and not bills due before it filed bankruptcy. He said the plans to continue its current level of service at Logan. [/P]
[P]Boston is a key city for US Airways, Castelveter said. [/P]
[P]A Massport spokesman and the authority''s director of administration and finance, Leslie Kirwan, could not be reached for comment. [/P]
[P]US Airways serves the international airports at Miami, Fort Lauderdale/Hollywood and West Palm Beach. [/FONT]

Down Range

Nov 20, 2002
[P][BR]----------------[BR]On 11/21/2002 3:08:21 PM genejockey wrote:[BR][FONT size=3][BR]A Massport spokesman and the authority's director of administration and finance, Leslie Kirwan, could not be reached for comment. [BR][BR][/FONT]----------------[BR][BR][STRONG][FONT face=Times New Roman]Due to her fielding calls from airline CEO's in Atlanta and Dallas.[/FONT][/STRONG][/P][/BLOCKQUOTE]


Aug 21, 2002
17 gates are a bit much for the current US Airways operation at BOS, given that it's now down to 59 daily mainline departures (that includes 31 on the Shuttle) and another 40 Express departures. I'd certainly imagine that the leases on those gates have to be pretty expensive compared to the amount of use they get now. I also remember Massport objected to Logan gate leases being classified as assets in the bankruptcy -- perhaps because they weren't seeing payments on the bonds.

I doubt the execs in Atlanta (unless you're talking about AirTran) are that interested in US's gates, given that the new Terminal A should be done in 2005. As for Dallas...are you talking about LUV or AMR, whose headquarters are technically in Fort Worth?


Aug 21, 2002
Seigel is already on record stating that Carty offered to purchase the BOS operation.


Boston will remain a key component for US Airways and I expect this city to become a big RJ operation, with some expanded mainline long haul service.

The default on the airport bonds was pre-petition and the post petition obligation will be met.



Aug 20, 2002
I wonder if retention of some of the gates at BOS has more to do with keeping airlines like JetBlue out. We know how badly JetBlue wants gate/terminal space at Logan. And we all know how the other airlines would rather take a bullet to the brain than give them that space.