US Airways emerges from Chapter 11, merges with America West

New York, Sept. 27 - US Airways Group, Inc. emerged from Chapter 11 Tuesday and combined with America West under the US Airways name.

The company's stock began trading under the symbol "LCC" on the New York Stock Exchange.

Following the transactions, the company said it has more than $2.5 billion in restricted and unrestricted cash.

The new airline, based in Phoenix, will operate under the name of US Airways, but the two parts will have separate Federal Aviation Administration operating certificates for two to three years until the FAA approves combining the two.

The exit from Chapter 11 follows confirmation of US Airways' plan of reorganization on Sept. 16.

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. The value of their recoveries will depend on the value of the shares of stock at emergence, as well as the total amount of allowed claims, including the amounts of disputed claims that have not yet been determined.

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.

The new investors are: ACE Aviation Holdings; Eastshore Aviation; Par Investment Partners; Peninsula Investment Partners; a group of investors represented by Wellington Management Co. and a group of investors represented by Tudor Investment Corp.

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.

America West chairman, president and chief executive officer Doug Parker will assume those same responsibilities at the merged company, with Bruce R. Lakefield, president and chief executive of the old US Airways, serving as non-executive vice chairman of the board of directors.

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

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.