US Airways to defer payments on debt for grounded aircraft

New York, July 1 - US Airways Group, Inc. said it will begin deferring payments on public debt relating to grounded aircraft and to some older Boeing aircraft still in service that have been targeted for debt modification.

The Arlington, Va. airline said it is already negotiating with creditors to reduce and restructure its costs and obligations and added that those discussions will now include the indenture trustees for the public debt affected.

As previously announced, US Airways said the payment deferrals were not linked to its current cash position and said it will otherwise continue to pay its day-to-day obligations.

US Airways on Friday completed its applications to the Air Transportation Stabilization Board for a $900 million federal loan guarantee on a $1 billion loan.

The applications included identification to the ATSB of the initial lenders that have agreed to participate in the $100 million "at risk" portion of the loan.

"We are pleased to be able to report positive progress on our ATSB application. Today's decision to defer payments on selected public debt and begin negotiations with affected trustees is a logical step to successfully conclude our restructuring activities," said president and chief executive officer Dave Siegel in a news release.

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