US Airways gets new aircraft financing

By Jeff Pines

Washington, Nov. 29 - US Airways Group Inc. said it reached an agreement with GE Capital Aviation Services Inc. and GE Engine Services that will give the Arlington, Va.-based airline $140 million of interim liquidity through a new bridge facility and the deferment of aircraft debt and lease payments over the next six months.

US Airways said it believes the agreement, which is subject to the approval of the U.S. Bankruptcy Court for the Eastern District of Virginia, will save it $80 million a year in cash and aircraft ownership and maintenance costs.

In addition, GE Capital Aviation will lease up to 31 new 70 and 90-seat regional jet aircraft to US Airways over the next three years, and US Airways will return 25 of its 281 mainline aircraft over the same time period. US Airways will return 10 Airbus 319s in 2005 and 15 Boeing 737-300s in 2006 and 2007.

"In the short term, we can return the 10 Airbus aircraft in 2005 on a schedule that will not impact our customers and will be consistent with our plans to increase aircraft utilization and point-to-point flying next year," said Bruce Lakefield, US Airways' president and chief executive, in a news release.

"The gradual return of 15 older 737-300s over the next three years, coupled with the regional jet financing agreement, will allow us to return to a path of moderate regional jet growth, enabling us to effectively serve smaller routes or develop new markets."

In return, the airline will give GE Capital Aviation a 15-year convertible note for between $125 million and $216 million when it emerges from Chapter 11. The final amount of the note will depend upon the lease options US Airways selects.

US Airways filed for bankruptcy on Sept. 12. Its Chapter 11 case number is 04-13819.

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