Judge Oks Us Airways Investment

[USA320Pilot]

Judge OKs US Airways investment - Air Wisconsin is providing $125 million

ARLINGTON (Charlotte Observer) - A bankruptcy judge on Monday allowed Air Wisconsin to invest $125 million in US Airways, a move that increases US Airways' chances of survival.

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Regards,

USA320Pilot

 

[USA320Pilot]

The AP article hyperlinked below provides an excellent summary of the benefits & intricacies of AWAC deal for US Airways.

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Regards,

USA320Pilot

 

[robbedagain]

that is great news. hope we can get the rest of the dough

 

[funguy2]

A couple of notes from the article:

"The $125 million loan can be converted into an equity investment by US Airways upon emergence from bankruptcy." (Emphasis added).

That says CAN, not WILL. Therefore, there is no guarantee, at this point, that AWAC, or Eastlake, end up being the equity investor... Apparently, the loan can be repaid at the end of BK (typical of DIP financing, not exit financing) or converted to equity (more typical of exit financing). A very creative arrangement.

"A new investor could match the $125 million provided by Air Wisconsin, or potentially supplant the Air Wisconsin investment if willing to provide the $250 million on more favorable terms."

Same point. AWAC is not necessarily the new owner of X% of US Airways.

 

[USA320Pilot]

The AP article on today’s bankruptcy court approval of the Eastlake/Air Wisconsin agreement made a couple of interesting points:

AP wrote: "The $125 million loan ‘can’ be converted into an equity investment by US Airways upon emergence from bankruptcy."

Funguy2/USA320Pilot comments: The article says “canâ€, not “willâ€. Therefore, there is no guarantee that Eastlake/AirWisconsin will end up being a final equity investor. The unique agreement between the parties can act as DIP financing while in the formal reorganization, which would have to be repaid upon emergence or it can converted to equity.

AP wrote: "While we're in bankruptcy we still have some flexibility as to how we structure our regional jet operations," said US Airways Vice President for Corporate Affairs Chris Chiames.

USA320Pilot comments: Chris Chaimes’ statement above clearly puts pressure on Richard Leach, Brian Bedford, and Jonathan Ornstein, and it also bodes well for US Airways to further lower its unit costs.

AP wrote: If Air Wisconsin loses the United routes, the deal with US Airways gives it another partner. Air Wisconsin spokeswoman Kelly Lanpheer said, though, that the deal with US Airways is more than a mere backup option. "Air Wisconsin sees the progress US Airways has made in its restructuring, and we're looking forward to the opportunity to build a new partnership with US Airways and continue one with United," she said.

AP wrote: "A new investor could match the $125 million provided by Air Wisconsin, or potentially supplant the Air Wisconsin investment if its willing to provide the $250 million in desired equity on more favorable terms."

USA320Pilot comments: I agree that Eastlake/AirWisconsin is not necessarily the new owner of US Airways and this could change in the next two week’s. Personally, I hope Air Wisconsin becomes a significant part of the US Airways Express network and replaces TSA and/or Mesa Airlines, which is one potential US Airways option.

Ron Stanley’s financial expertise is clearly evident because he coordinated a very creative arrangement. As Arnold & Porter bankruptcy counsel Brian Leitch said, “It opens up a wide universe of potential (US Airways) investors." Moreover, even though US Airways' employees are facing uncertain and somewhat perplexing times, I have a lot of faith in Bruce Lakefield to rebuild the airline.

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Regards,

USA320Pilot

 

[usairways_vote_NO]

AP wrote: "The $125 million loan ‘can’ be converted into an equity investment by US Airways upon emergence from bankruptcy."

Funguy2/USA320Pilot comments: The article says “canâ€￾, not “willâ€￾.

[post="251610"][/post]​

Sorry its spoken for already for the 130+ mil loss in jan

 

[mweiss]

Sorry its spoken for already for the 130+ mil loss in jan

[post="251618"][/post]​

The two don't have to be related at all.

 

[usairways_vote_NO]

The two don't have to be related at all.

[post="251729"][/post]​

Well you know my sarcastic ways and I linked em.

 

[usairways_vote_NO]

Removed by poster

 

[funguy2]

AP wrote: "While we're in bankruptcy we still have some flexibility as to how we structure our regional jet operations," said US Airways Vice President for Corporate Affairs Chris Chiames.

AP wrote: If Air Wisconsin loses the United routes, the deal with US Airways gives it another partner. Air Wisconsin spokeswoman Kelly Lanpheer said, though, that the deal with US Airways is more than a mere backup option. "Air Wisconsin sees the progress US Airways has made in its restructuring, and we're looking forward to the opportunity to build a new partnership with US Airways and continue one with United," she said.

And as I've written in another thread....

What happens when US Airways completes its fast track BK on 6/30/05 and Air Wisconsin gets its walking papers from UAL on 9/1/05?

At this point, US Airways no longer in BK cannot reject Mesa, TSA, or Chautauqua, but Air Wisconsin has the right to place 70 RJs at US Airways. I am guessing that US Airways does not need 70 more, primarily 50-seat, regional jets.

For this reason alone, if Air Wisconsin is has not exercised its option to place aircraft at US Airways before emergence from BK, US Airways WILL repay the DIP financing upon emergence from BK... The company simply cannot afford to be forced to take 70 new RJ's.

 

[a320av8r]

Sure we can, just park more 737's...

 

[RowUnderDCA]

AirWis is a United Express carrier, but not a USAirways Express carrier. Are there any other carriers that fall into this subset?

If this does put pressure on Mesa and Bedford's company and the other carriers that are already providing service as both UAL and US x carriers, could then U and its subsidiaries, along with Mesa Republic and Air Wis, become Star Express NA, with a new mix of aircraft (admittedly jumbled) that provide more flexibility for providing express type services across the entire U.S?

So, you'd have the Star carrier in the U.S. have a United brand, Ted Brand and United Star jet brand, plus some limited prop ops. Kind sounds like a Seabury solution, ala Air Canada.

 

[funguy2]

Sure we can, just park more 737's...

[post="251773"][/post]​

If you do it after BK... You'll be paying for them whether they fly or sit...

 

[funguy2]

RowUnderDCA:

You are correct in that this could just be a game of musical chairs with UA* and US* providers. However, US Airways is essentially giving UA and opportunity to screw them... I think that's a bad move, unless there is a plan to fix it down the line. Since I believe US Airways' management to have some level of intelligence, I have to assume they have a plan for this... Problem is, I also know how well US Airways' plans turn out...