US Airways, ATSB discuss warrant buyback

By Caroline Salls

Pittsburgh, Sept. 23 - US Airways Group, Inc. has had discussions with the Air Transportation Stabilization Board regarding a proposed repurchase of its warrants to acquire 7.74 million shares of new US Airways' common stock following completion of its merger with America West Holdings Corp. and its proposed public offering of new common stock, according to an 8-K filing with the Securities and Exchange Commission.

According to the filing, if mutually acceptable terms can be reached, definitive agreements on the repurchase would be subject to approval by the new board of directors of US Airways Group.

Any proposed repurchase price would take into account the market price of the new common stock of US Airways Group, the exercise price of the warrants and the option value of the warrants.

The ATSB warrants have an exercise price of $7.27 per share of new US Airways Group common stock and expire January 2012.

According to a U.S. Treasury news release, the ATSB supports US Airways' planned exit from Chapter 11 and merger with America West Airlines.

According to the Treasury release, the board has worked with both US Airways and America West to restructure their existing guaranteed loans to be compatible with the new business plan of the combined companies and is working with a financial adviser to assess the remarketing of the two loans to private investors without the government guarantee.

The board said the adviser is also gauging the marketability of the board's warrant to purchase shares in the new US Airways.

The ATSB is receiving the warrant in exchange for the original warrant obtained as part of the compensation to the government for the loan guarantee provided to America West in 2002, the release said.

In addition, the board said it is exploring strategies to sell its remaining warrants in World Airways and Frontier Airlines.

US Airways, an Arlington, Va.-based airline, filed for bankruptcy on Sept. 12, 2004 in the U.S. Bankruptcy Court for the Eastern District of Virginia. Its Chapter 11 case number is 04-13819.

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