Carrier: "On Track" To Emerge From Bankruptcy
US Airways announced it has made payments on its 2000-1 and
2000-3 pass through trust related to Airbus aircraft. These
payments, totaling $64.2 million, were due on Feb. 20, 2003, and
March 3, 2003, respectively, and were made prior to the end of the
applicable cure periods.
In addition, US Airways announced that, in connection with the
Airbus aircraft payments, it had drawn down $69 million of the
Retirement Systems of Alabama's (RSA) debtor-in-possession
financing facility (DIP). The remaining $131 million of the RSA DIP
continues to be subject to the applicable closing conditions.
Hurdles Ahead
Although US Airways says it is on track to emerge from Chapter
11 on March 31, 2003, it first must resolve several remaining
issues, each of which is critical to the company, including:
- Successful resolution of its pilot pension obligations.
The company has begun formal negotiations with the Air Line Pilots
Association (ALPA) following the U.S. Bankruptcy Court's approval
to terminate the existing pension plan.
- The U.S. Bankruptcy Court must confirm the company's proposed
Plan of Reorganization. Balloting on the plan by the
company's creditors closes on March 10, 2003, and a confirmation
hearing is scheduled for March 18-20, 2003.
- Defer or make payment on 2001-1 pass through trust certificates
related to additional Airbus aircraft, due on March 20, 2003.
Total value is $27 million.
- Reach agreement on a replacement credit card processor.
US Airways was granted authorization on Jan. 17,
2003, by Judge Stephen S. Mitchell of the U.S. Bankruptcy Court of
the Eastern District of Virginia, to solicit approval from its
creditors on its plan of reorganization that provides for the
airline's emergence from Chapter 11 protection in March 2003.
Following a four-day hearing, on March 1, 2003, Judge Mitchell
rendered a decision stating that US Airways had met the financial
standards for a distress termination of the defined benefit pension
plan for its pilots. The court's finding was required for the
Pension Benefit Guaranty Corporation (PBGC) to begin consideration
of its separate approval process to formally terminate the existing
pilot pension plan by March 31, 2003, in conjunction with US
Airways' planned emergence from bankruptcy protection set for that
same day. Judge Mitchell also authorized US Airways to implement a
defined contribution pension plan on terms to be worked out between
the company and ALPA.
US Airways has received proposals from and is in
negotiations with potential credit card processors for Visa and
MasterCard transactions, once US Airways emerges from Chapter 11
bankruptcy protection and transitions its current relationship with
National Processing Corp. (NPC), a division of National City Bank
of Cleveland. US Airways currently has an agreement with NPC, which
expires March 31, 2003, but which provides for a 45-day extension
if a series of milestones are met.
US Airways also has a debt obligation payable March 20, 2003,
totaling $27 million dollars for 14 Airbus aircraft. The company
currently is in discussions with certain interested parties
regarding these payments and anticipates reaching agreement during
the five business-day cure period, allowing for the extension of
this payment, if necessary.
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