Bankruptcy Court permits US Airways sale/leaseback transaction
The U.S. Bankruptcy Court for the Eastern District of Virginia Friday entered an order that will allow US Airways Group to close on its previously announced plans to sell certain Embraer regional jet aircraft and slot assets to Republic Airways Holdings.
US Airways said that upon closing the transaction, which is expected to occur within the next two weeks, it will gain approximately $100 million in cash.
At the same time, the Bankruptcy Court approved a deal reached between US Airways and the Pension Benefit Guaranty Corp. (PBGC), resolving nearly $2.7 billion in claims. The agreement provides for US Airways to pay the PBGC $13.5 million in cash, in addition to giving the PBGC a $10 million note and 70 percent of the common stock being allocated to unsecured creditors.
US Airways also filed motions last week, and received interim approval to sell and leaseback five Airbus A330’s, nine Airbus A319’s and five Airbus A320’s. The sale and leaseback transactions are scheduled to be heard by the Bankruptcy Court Sept. 9. If approved and consummated later this month, US Airways said it would realize additional liquidity in excess of $120 million.
“We are very pleased with the results of our asset sale programs. The additional liquidity realized from these transactions, when added to the cash being generated from other capital resources, should allow us to emerge from Chapter 11 with an even larger cash cushion than originally anticipated,” said Ron Stanley, US Airways’ executive vice president of finance and chief financial officer.
US Airways is in the process of merging with America West Airlines, which the two companies expect to close in late September or early October.