US Seeking to Refinance Debt

[700UW]

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Press Release Source: US Airways Group, Inc.

US Airways in Discussions Regarding Possible Debt Refinancing
Wednesday March 15, 11:17 am ET

TEMPE, Ariz., March 15 /PRNewswire-FirstCall/ -- US Airways Group, Inc. (NYSE: LCC - News) announced that it has entered into a commitment letter with GE Commercial Finance regarding a possible debt financing transaction that would permit US Airways to refinance approximately $1.1 billion of its outstanding indebtedness. The new $1.1 billion term loan facility is expected to bear interest at LIBOR plus 3.50 percent to 3.75 percent, subject to adjustment in connection with the final loan documentation, final credit ratings and the syndication process. The term of the facility is expected to be five years with the entire principal amount of the loan payable in full at maturity.

 

[RICflyer]

This is good news!

"US Airways anticipates that the refinancing transaction, which is currently targeted for completion by April 6, 2006, will permit the company to extend maturities and reduce its near-term interest expense by a significant amount."

This well help cashflow and net income!!

Things continue to lookup for US

 

[allunionsdeceive]

This is good news!

"US Airways anticipates that the refinancing transaction, which is currently targeted for completion by April 6, 2006, will permit the company to extend maturities and reduce its near-term interest expense by a significant amount."

This well help cashflow and net income!!

Things continue to lookup for US

All sounds good

 

[Pacemaker]

"NWA figures out ways to gouge it's core customer base."

If it turns out that the market will bear it, then it's not gouging. The same argument is often used to decry the high cost of houses in California that "aren't worth it"; and it's just as specious.

 

[FWAAA]

I've gotta ask: What's in it for GE to agree to further modifications of its US debt? I assume that US isn't threatening to file Ch 11, so US is probably offering some cash now to get GE to agree to new terms. Lenders don't renegotiate just for the hell of it or just because the borrower calls and asks. B)

 

[ClueByFour]

If it turns out that the market will bear it, then it's not gouging.

You will note that the only airline to make a profit for the past 32 years does not operate this way. Coincidence?

The same argument is often used to decry the high cost of houses in California that "aren't worth it"; and it's just as specious.

Sure. That's what everyone in Cali who was left holding the bag after the bottom fell out of that market in the early 1990s said, too. Especially while their mortgages were under water.

 

[BoeingBoy]

The company has closed on a loan of $1.1 Billion from GE Capital.

SEC Filing & Loan Agreement

The proceeds of the loan were used, in part, to repay:
- The "old" US loan originally guaranteed by the ATSB
- The HP loan originally guaranteed by the ATSB
- $161 Million loan from Airbus
- A "spare parts" loan from GE Capital
- A "engines" loan from GE Capital

In addition, the $89 Million loan from Airbus was terminated (which, together with the above $121 Million, constituted the $250 million loaned by Airbus). US had not accessed this money yet.

The available documents don't say how much of the $1.1 Billion was used to repay these previous loans, but the annual report says that the "two ATSB" loans had outstanding balances of $551 Million ("Old" US) and $250 Million (HP), for a total of $801 Million as of 12/31/05.

Absolutely unclear is what effect, if any at all, this will have on the A350 orders which were originally tied to the Airbus money. The safe assumption is probably "nothing" and that this is entirely to consolidate various loans and possibly lower interest rates.

Jim

 

[Walmartgreeter]

Absolutely unclear is what effect, if any at all, this will have on the A350 orders which were originally tied to the Airbus money. The safe assumption is probably "nothing" and that this is entirely to consolidate various loans and possibly lower interest rates.


Jim, in my perfect world we would be able to drop the A350 in place of the Boeing 787..and perhaps get them two years sooner.

Looks like some very smart moves, for a change, on the finance side of company.

Take care. Mark.

 

[Seatacus]

Could be they are getting ready for the next merger/sale.

 

[700UW]

Discussed here

 

[BoeingBoy]

After some digging in the annual report it looks like the two GE loans ("spare parts" & "engines") had an outstanding balance of $76 million.

Jim


Oops, I forgot about that earlier thread 700. Maybe the mods will tack this onto the end of that one.

Jim

 

[700UW]

Jim,

No problem, a new thread is cool, it gives us greater details.

I had to search for it myself.

 

[HPearlyretiree]

Sounds interesting, maybe the 350 isn't gonna be it.

I'd love to see US get into Asia sooner, rather than later.

Maybe if DL tanks, there will be some 777's on the market?

 

[PITbull]

Could be they are getting ready for the next merger/sale.

Perhaps they are getting ready for some hefty fuel prices.

 

[delldude]

Perhaps they are getting ready for some hefty fuel prices.

good point pitbull...curious...what exactly was the fuel price they based on in the emergence plan? $40 oil?