US Airways plan 'overwhelmingly' approved by creditors; confirmation hearing starts Thursday

By Caroline Salls

Pittsburgh, Sept. 14 - US Airways, Inc.'s Chapter 11 plan of reorganization, anchored by its proposed merger with America West Airlines, was overwhelmingly approved by US Airways' creditors, according to a company news release.

America West's shareholders also approved the plan, the release said.

A plan confirmation hearing is scheduled to begin Thursday in the U.S. Bankruptcy Court for the Eastern District of Virginia.

According to the release, every class of creditors that was entitled to vote on the plan, voted in favor by at least 90% in dollar amount and by 80% in the number of votes cast, well in excess of the required two-thirds dollar-amount vote and more than the required one-half of the number of votes.

"This strong vote of confidence by our creditors adds momentum as we look to emerge from Chapter 11 and complete our merger with America West Airlines in a few weeks," US Airways president and chief executive officer Bruce R. Lakefield said in the release.

Under the terms of the merger agreement, the transaction can close on the 11th day following plan confirmation.

Under the plan, unsecured creditors holding claims of $50,000 or less will receive a cash payment of 10% of the amount of their claim.

Other unsecured creditors will receive 30% of the unsecured creditors' stock in the reorganized company. Their recovery is expected to be between 3.1% and 17.4%. These claims are estimated to be between $408.5 million and $1.24 billion.

US Airways has received commitments on $565 million in new equity investment and participation by suppliers and business partners that, together with the new equity, are expected to provide the company with $1.5 billion in liquidity.

America West will become a wholly owned subsidiary of the reorganized group, and the existing shareholders of America West will receive about 37% of the new common stock of the reorganized group.

Also under the plan, the reorganized group may conduct a stock offering to purchase up to $150 million in shares of new common stock, a portion of which may be offered to existing common stockholders of America West.

US Airways, an Arlington, Va.-based airline, filed for bankruptcy on Sept. 12, 2004. Its Chapter 11 case number is 04-13819.

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