Us Airways Moves Closer To Exiting Bankruptcy

USA320Pilot

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May 18, 2003
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US Airways Moves Closer To Exiting Bankruptcy

ARLINGTON (WSJ.com) - A judge on Tuesday allowed US Airways to send its reorganization plan to creditors for a vote, moving the air carrier one step closer to emerging from Chapter 11 bankruptcy-court protection.

U.S. Bankruptcy Judge Stephen Mitchell scheduled a hearing for Sept. 15 to consider final court approval of the plan. The hearing is scheduled two days after America West Airlines' shareholders are scheduled to approve the company's merger with US Airways. America West Airlines is owned by America West Holdings Corp.

The merger is the centerpiece of US Airways' reorganization plan.

Judge Mitchell approved the airline's disclosure statement, which will accompany creditors' ballot on the proposed reorganization.

The reorganization plan doesn't resolve several objections raised by the airline's unions. Labor groups are upset that US Airways wants to scale back a proposed profit-sharing plan with workers to accommodate new investors in the merged airline.

Judge Mitchell urged the airline and its unions to resolve their dispute before the Sept. 15 hearing.

The labor unions withdrew their objections to the disclosure statement at Tuesday's hearing but reserved their right to object to the plan's confirmation.

US Airways' chief executive, Bruce Lakefield, said Tuesday's hearing was a "another good step" in the airline's path to reorganization. He said US Airways hopes to formally emerge from bankruptcy in late September or early October.

"We're right at the doorstep of a successful restructuring," said US Airways attorney Brian Leitch. Although the plan is "not perfect for all stakeholders," it will preserve thousands of jobs and allow US Airways, in its second trip through bankruptcy court, to survive, Mr. Leitch said.

According to US Airways' disclosure statement, America West will become a wholly owned subsidiary of US Airways, and existing America West shareholders will receive about 37% of the merged airline's shares.

Investors in the merger, who have pledged a total of $565 million, are slated to receive about 52% of the reorganized US Airways.

The remaining shares will fund distributions to the Pension Benefit Guaranty Corp. and US Airways' general unsecured creditors. According to court papers, the unsecured creditors are owed between $408.5 million and $1.2 billion, and are expected to recover between 3.1% and 17.4% on their claims.

In addition to shares in the reorganized airline, the PBGC, which had taken on US Airways' pension obligations, will receive $13.5 million in cash and a $10 million promissory note bearing 6% interest.

US Airways' Chapter 11 plan also provides for the full satisfaction of the $708 million outstanding under its loan guaranteed by the Air Transportation Stabilization Board, which signed off on the America West merger last month.

In the disclosure statement, US Airways said it also may conduct a stock offering for up to $150 million shares of new common stock, a portion of which may be made available to existing America West shareholders and certain US Airways creditors.

America West shareholders are slated to vote on the merger, which would create the nation's largest low-cost carrier and fifth largest domestic airline, on Sept. 13.

US Airways, of Arlington, Va., filed for Chapter 11 bankruptcy-court protection for a second time in September 2004.

US Airways and America West expect to complete their merger in the fall.
 
May 9, 2004
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According to court papers, the unsecured creditors are owed between $408.5 million and $1.2 billion, and are expected to recover between 3.1% and 17.4% on their claims.

I wonder how the UAir execs can look these guys in face when they have to play golf together at the country club.
 

robbedagain

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Oct 13, 2003
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if the fuel continues to climb, and (from another thread) fuel shortages continue, how will this merger ever make it off the ground?
 

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