US Airways Group sells $752 million government-backed loan; pays off ATSB debt

By Caroline Salls

Pittsburgh, Oct. 19 - US Airways Group, Inc. sold its $752 million government-backed loan at a slight premium to 13 fixed-income investors, according to a company news release.

The loan was part of $777 million in debt that was sold in the transaction.

The loans that were sold were granted to the former America West Airlines and US Airways in the aftermath of Sept. 11, 2001, and the total outstanding balance of these loans is $832 million, with $55 million held by two other existing investors.

Terms associated with the loans remain unchanged, with the former America West loan terminating in 2008 and the former US Airways loan terminating in 2010.

"Not only has the government received full payment of its original loans, with interest and fees totaling approximately $180 million, taxpayers also received an additional $116 million earlier this month when the Air Transportation Stabilization Board sold warrants associated with America West's original loan," US Airways Group chairman, president and chief executive officer Doug Parker said in the release.

"When the ATSB loan guarantee program was put into place, there was much skepticism surrounding both America West's and US Airways' ability to ever repay their loans. With the loan now successfully remarketed, and with the ATSB receiving full payment including interest as well as additional funds related to America West's warrants, that skepticism has been put to rest."

US Airways, previously an Arlington, Va.-based airline, filed for bankruptcy on Sept. 12, 2004 in the U.S. Bankruptcy Court for the Eastern District of Virginia.

The company emerged from bankruptcy and completed its merger with America West on Sept. 27. Its Chapter 11 case number was 04-13819.

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