US Airways issues stock for $250 million in America West's 7.25% notes

By E. Janene Geiss

Philadelphia, Oct. 28 - US Airways Group, Inc. said it issued stock for approximately $250 million in principal amount at maturity of America West Airlines, Inc.'s 7.25% senior exchangeable notes due 2023.

Investors had the right to exchange the notes due to the merger between US Airways and America West, according to a company news release.

The amount of notes exchanged represented 99% of the outstanding principal amount, US Airways said.

US Airways exchanged 16 shares of US Airways Group common stock per $1,000 principal amount at maturity for a total of 4.2 million shares, officials said.

Other than a "modest" payment for accrued interest, the transaction does not result in a cash outlay for US Airways.

Following the exchange, the company has 82 million primary shares of common stock outstanding.

The notes were originally issued in July 2003 and represented $87 million in debt on the company's balance sheet. The reduction of debt will lower annual interest expenses by $6.9 million, officials said

"Converting debt to equity further strengthens our balance sheet while reducing annual interest expenses," US Airways Chief Financial Officer Derek Kerr said in the release.

US Airways and America West's merger creates the fifth largest domestic airline.

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