US Airways obtains commitment for another $125 million of equity

New York, March 14 - US Airways Group, Inc. said it obtained a commitment for a further $125 million investment on its exit from Chapter 11, this one from Republic Airways Holding, Inc. and its majority shareholder Wexford Capital LLC.

The deal is in addition to the $125 million announced last month from Eastshore Aviation LLC, an investment entity owned by Air Wisconsin Airlines Corp. shareholders and Air Wisconsin Airlines Corp.

The $125 million equity investment from Republic and Wexford is subject to US Airways securing a total of $350 million in new cash investment. including the $125 million from Republic and the $125 million from Eastshore to finance its plan of reorganization. Other conditions include approval of US Airways' business plan by Republic.

In addition, US Airways will amend and restate its existing jet service agreement with Chautauqua Airlines, which is operated by Republic. The existing agreement will be extended and US Airways will enter into a new jet service agreement with Republic for regional jet feed using the Embraer 170 and 190 aircraft under the US Airways Express brand.

Subject to approval by the Air Transportation Stabilization Board, the agreement will make additional financing available to US Airways.

Before the effective date of the reorganization and before Dec. 31, 2005, US Airways may exercise its option to sell for $110 million various assets, including 10 Embraer-170 aircraft it currently owns and the three Embraer-170 aircraft currently committed for delivery; other Embraer-170 related assets, such a flight simulator and other items; 113 commuter slots at Ronald Reagan Washington National Airport; and 24 commuter slots at New York's LaGuardia airport. US Airways will also assign to Republic the leases for an additional 15 Embraer-170 aircraft.

Republic will enter into a regional jet service agreement to continue operation of the aircraft as US Airways Express and Republic will lease back the slots to US Airways. After two years US Airways will have the right to repurchase the LaGuardia and Washington slots.

After the effective date of the plan of reorganization, if US Airways does not exercise the slots sale/leaseback option, Republic has an option to purchase or assume debt and leases for all 28 Embraer-170 aircraft and to fly them as US Airways Express. This part of the agreement will effectively sell US Airways' MidAtlantic aircraft to Republic.

US Airways will ask the U.S. Bankruptcy Court for the Eastern District of Virginia to approve the Republic transaction at a hearing on March 31.

US Airways added that in light of the new equity commitment and "substantial progress" in the restructuring, General Electric's GECAS subsidiary and other affiliates have agreed to US Airways' request to extend the date by which the company will file its plan of reorganization until April 15.

The agreement with Eastshore announced last month is for a $125 million debtor-in-possession term loan that will convert to equity in the reorganized company on its emergence from Chapter 11.

US Airways, an Arlington, Va.-based carrier filed for bankruptcy on Sept. 12. Its Chapter 11 case number is 04-13819.

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