Positive News: New Us Airways Has Repaid The Atsb Loans 5 Years Early

[TheNewLowFare]

Excellent news. The new US Airways
has repaid the ATSB loans 5 years
early. See story.

CHICAGO, Oct 19 (Reuters) - US Airways Group (LCC.N: Quote, Profile, Research) on Wednesday said debt totaling $777 million, of which $752 million was backed by the government, has been sold at a slight premium to par to 13 fixed-income investors.

These loans had been granted to the former America West Airlines and US Air following the Sept. 11, 2001, terror attacks on the United States. The current outstanding balance of the loans is $832 million, with $55 million held by two other investors.

US Air and America West merged their operations this year to form a single airline.

Terms associated with the loans are unchanged, with the former America West loan terminating in 2008 and the former US Airways loan terminating in 2010.

"Today's announcement signifies the payoff of both the former America West and US Airways government-backed loans," said US Air Chief Executive Doug Parker in a statement

 

[UWCactus]

It's important to remember that in this situatin the government load is paid, however the company now has to pay the loan amounts to a different entity. They still owe the money.....just not to the government any long.

 

[delldude]

It's important to remember that in this situatin the government load is paid, however the company now has to pay the loan amounts to a different entity. They still owe the money.....just not to the government any long.

kinda takes the sugar coating off there..... :blink:

 

[AP Tech]

They have not repaid the loan rather the loan has been sold to other groups, simular to your home mortgage being sold over and over during the life of the loan. So bottom line is U still owes the $$$$

 

[MarkMyWords]

so the benefit of selling the loan is to remove the convenants and restrictions that were put on by the ATSB, right?

 

[DCaf]

so the benefit of selling the loan is to remove the convenants and restrictions that were put on by the ATSB, right?

Yep, and that's a good thing, as Martha would say.

 

[DCAflyer]

so the benefit of selling the loan is to remove the convenants and restrictions that were put on by the ATSB, right?

No... the loan was sold. LCC just makes payments to a different company. That's the only difference. The terms are still in force and effect.

Read from the article: "Terms associated with the loans are unchanged, with the former America West loan terminating in 2008 and the former US Airways loan terminating in 2010."

 

[Swaayze]

Don't confuse the "terms of the loan" with the restrictions, covenants and controls that the ATSB had over the loan.

This broke some chains, hopefully there's a good reason for paying more interest yet to be disclosed.

No... the loan was sold. LCC just makes payments to a different company. That's the only difference. The terms are still in force and effect.

Read from the article: "Terms associated with the loans are unchanged, with the former America West loan terminating in 2008 and the former US Airways loan terminating in 2010."

 

[awajetfxer]

Its like your mortgage, the company that gives you the loan will sell it to another banking institution, but you still have to repay the loan.

 

[MarkMyWords]

I understand having to repay the loan, but I was looking at what the benefit would be of selling the loan, since it was our choice to sell it. When your mortgage is sold, it is usually at the discretion of the bank, not the customer, unless the customer is the one that choses to refinance the loan. The only thing I could come up with is that it would remove some of the restrictions and convenants that were in place by the ATSB, but couldn't find whether that was true or not.

 

[Rico]

There is no reason to have payed off the ATSB except to free the company from the current restrictions in place.

What is interesting about this is that it gives the company some freedom to now shed assets (ie PDT and PSA), yet retain all of the capital from doing so.

 

[DCAflyer]

I understand having to repay the loan, but I was looking at what the benefit would be of selling the loan, since it was our choice to sell it. When your mortgage is sold, it is usually at the discretion of the bank, not the customer, unless the customer is the one that choses to refinance the loan. The only thing I could come up with is that it would remove some of the restrictions and convenants that were in place by the ATSB, but couldn't find whether that was true or not.

Mark,

I'm not sure that LCC facilitated the sale, but I can see where one would think that because LCC made the announcement. However, there might have been some benefits to rolling both loans into a single loan. Some of the original investors may have wanted out and some other parties may have wanted in and maybe it made sense for those reasons to re-consort the investors and consolidate the two loans. I really am at a loss as to the reasons, but I assume on some big business financing level it made sense for everyone. For the peon employees, however, this is very much a non-event. Of course, I'm sure a certain captain will have his spin on how this is a precurser to LCC buying the assets of UAL at a courthouse steps sale.

 

[justaumechanic]

Are you smoking Crack!!! US didn't make the choice about selling the ATSB loan, the ATSB made
that decision. They wanted out of the loan business.. They feds also sold it at a premium.. Read
the info that was put out.. US went from a protected 777 million dollar loan to an 832 million
dollar loan that is unprotected. US fails to pay on the loan and the banks can seize teh assets..

There are plenty of restrictions. You don't get banks to fork over 832 million dollars without plenty
of restrictions. Read the information. The feds made money on the deal.. Thats why its called a
premium sale.. US Airways didn't get the premium.

I understand having to repay the loan, but I was looking at what the benefit would be of selling the loan, since it was our choice to sell it. When your mortgage is sold, it is usually at the discretion of the bank, not the customer, unless the customer is the one that choses to refinance the loan. The only thing I could come up with is that it would remove some of the restrictions and convenants that were in place by the ATSB, but couldn't find whether that was true or not.

 

[MarkMyWords]

Justamechanic -

Show me where it says that the ATSB initiated the sale of the loan.

The ATSB placed very tough covenants and cash restrictions on the "protected" loans. That is why we had to kiss the ATSB's behind in bankruptcy every time our cash position slipped. There were also restrictions that if we sold any asset, 50% of the money from the sale would go to pay down the ATSB loan, again restricting the amount of cash we could actually use/get our hands on. Removing those restrictions and covenants gives the company the ability to do what they want.

 

[justaumechanic]

You want it.. Here you go.

This is the part where the Feds are saying they want out of the Loan Business..

http://www.ustreas.gov/press/releases/js2942.htm

http://www.ustreas.gov/press/releases/js2979.htm