A320 EOW
Sep 5, 02, 12:08 pm
http://biz.yahoo.com/rc/020905/airlines_usairways_judge_2.html
Reuters Company News
US Airways plan to walk from 67 planes approved
Thursday September 5, 1:53 pm ET
By Peter Kaplan
ALEXANDRIA, Va., Sept 5 (Reuters) - A federal judge on Thursday allowed US Airways Group Inc. to return 67 aircraft, a key element of its plan to restructure itself under bankruptcy protection from creditors.
Judge Stephen Mitchell of the U.S. Bankruptcy Court for the Eastern District of Virginia approved a pact reached between the airline and certain leasing companies and creditors which had earlier objected to taking the aircraft back.
The lenders and leasing companies could still file claims against the airline related to the aircraft later in the bankruptcy proceedings, US Airways attorney John Butler told the judge.
US Airways, the nation's sixth-largest airline, filed for Chapter 11 bankruptcy protection on Aug. 11 after failing to win concessions from all of its unions, vendors and creditors to restructure its operations.
The airline had argued that the aircraft, a mix of Fokker 100s, MD-80s, Boeing 737s and Boeing 757s, no longer fit into its business plan.
Among those originally objecting were German state-owned bank Kreditanstalt fuer Wiederaufbau, with 17 planes involved, John Hancock Life Insurance Co. (two planes), Dutch bank ABN AMRO (two planes) and Credit Suisse First Boston (one aircraft).
All but 10 of the 67 aircraft are already mothballed. Under the deal reached Thursday, US Airways will pay some storage and insurance costs for a short period.
Butler said US Airways was negotiating to retire a further 22 aircraft. "This entire industry is involved in an exercise to reduce and retire aircraft. It's a process we intend to continue," he told the judge.
The airline is trying to cut costs by $1.3 billion and already has won more than $500 million in annual concessions from its pilots and flight attendants.
On Aug. 12, another judge permitted the airline to proceed with the first stage of its $500 million debtor-in-possession funding plan. The package is backed by a group led by Credit Suisse First Boston and Bank of America Corp..
Access to the next tranche, up to $175 million, is due to be considered on Sept. 26, at a hearing on whether to finalize court approval of the financing package. The bankruptcy court will then also review the status of a proposed $200 million equity investment that has been pledged to the carrier by Texas Pacific Group after it emerges from Chapter 11.
US Airways is the first major domestic carrier to seek bankruptcy protection since the Sept. 11 attacks triggered a financial crisis in an industry that already had been wracked by recession. The airline lost almost $2 billion last year and was $500 million in the red in the first half of 2002.
Edited to update the article, including planes involved.
[This message has been edited by A320 EOW (edited 09-05-2002).]
Reuters Company News
US Airways plan to walk from 67 planes approved
Thursday September 5, 1:53 pm ET
By Peter Kaplan
ALEXANDRIA, Va., Sept 5 (Reuters) - A federal judge on Thursday allowed US Airways Group Inc. to return 67 aircraft, a key element of its plan to restructure itself under bankruptcy protection from creditors.
Judge Stephen Mitchell of the U.S. Bankruptcy Court for the Eastern District of Virginia approved a pact reached between the airline and certain leasing companies and creditors which had earlier objected to taking the aircraft back.
The lenders and leasing companies could still file claims against the airline related to the aircraft later in the bankruptcy proceedings, US Airways attorney John Butler told the judge.
US Airways, the nation's sixth-largest airline, filed for Chapter 11 bankruptcy protection on Aug. 11 after failing to win concessions from all of its unions, vendors and creditors to restructure its operations.
The airline had argued that the aircraft, a mix of Fokker 100s, MD-80s, Boeing 737s and Boeing 757s, no longer fit into its business plan.
Among those originally objecting were German state-owned bank Kreditanstalt fuer Wiederaufbau, with 17 planes involved, John Hancock Life Insurance Co. (two planes), Dutch bank ABN AMRO (two planes) and Credit Suisse First Boston (one aircraft).
All but 10 of the 67 aircraft are already mothballed. Under the deal reached Thursday, US Airways will pay some storage and insurance costs for a short period.
Butler said US Airways was negotiating to retire a further 22 aircraft. "This entire industry is involved in an exercise to reduce and retire aircraft. It's a process we intend to continue," he told the judge.
The airline is trying to cut costs by $1.3 billion and already has won more than $500 million in annual concessions from its pilots and flight attendants.
On Aug. 12, another judge permitted the airline to proceed with the first stage of its $500 million debtor-in-possession funding plan. The package is backed by a group led by Credit Suisse First Boston and Bank of America Corp..
Access to the next tranche, up to $175 million, is due to be considered on Sept. 26, at a hearing on whether to finalize court approval of the financing package. The bankruptcy court will then also review the status of a proposed $200 million equity investment that has been pledged to the carrier by Texas Pacific Group after it emerges from Chapter 11.
US Airways is the first major domestic carrier to seek bankruptcy protection since the Sept. 11 attacks triggered a financial crisis in an industry that already had been wracked by recession. The airline lost almost $2 billion last year and was $500 million in the red in the first half of 2002.
Edited to update the article, including planes involved.
[This message has been edited by A320 EOW (edited 09-05-2002).]