US Airways plans $388M offering

[SparrowHawk]

US Airways plans $388M offering
Charlotte Business Journal
Date: Tuesday, June 21, 2011, 10:57am EDT

US Airways Group Inc.bizWatch plans a $388 million debt offering to refinance and buy Airbus planes.

The offering comprises $294 million equipment trust certificates maturing in 2023 and $94 million that mature in 2018.

The carrier will use the proceeds to refinance five Airbus planes in its fleet and buy four planes scheduled to be delivered in September and October.

The airline operates its largest hub at Charlotte Douglas International Airport. Tempe, Ariz.-based US Airways (NYSE:LCC) operates 3,200 daily flights to 200 domestic and foreign destinations.

OK, so is this good news, Bad news or no news?

Never really understood how aircraft are financed, perhaps others more knowledgeable can shed some light.

 

[UPNAWAY]

I'd say it is ho hum. Good would be paying off debt, bad would be missing a payment or getting higher rates.

This is like refinancing your house to making your payments cheaper, it helps in the day to day things and I assume they are doing it now because of the new deliveries staring this fall. So they got a package deal to not only take care of those but refi some of the other aircraft with more favorable terms.

 

[oscarjazz]

OK, so is this good news, Bad news or no news?

Never really understood how aircraft are financed, perhaps others more knowledgeable can shed some light.

Most airlines use Enhanced Equipment Trust Certificates to finance their aircraft. In general EETC's take a group of aircraft, not necessarily the same types and ages of aircraft, and create a pooled mortgage. They sell that pooled mortgage to a variety of investors in several divisions or tranches. The senior tranches get paid off first in case of a default and they pay the lowest interest payments. As you move further down the food chain you have the most risk but the highest interest rate.

If these sound like the Collateralized Debt Obligations (CDO's) that started this financial collapse it's because they are exactly like that. The only difference is that the market for aircraft is very well known and not subject to manipulation by dishonest appraisers. Also, it is quite difficult for airlines to lie about their income. As far as I know, almost all aircraft financing these days is done through EETC's.

The EETC's are favored by airlines because they generally bring in lower interest rates. Investors like EETC's because they are virtually bankruptcy proof due to the large number of aircraft and investors included in each certificate.

I am just a pilot, not a wall street guy, so take this all with a grain of salt.

 

[28L_or_10R?]

Anyone know the lineup of new aircraft this fall?

 

[john john]

Anyone know the lineup of new aircraft this fall?

Let me throw some fuel on the party
EAST or WEST
Sad isn’t it

 

[28L_or_10R?]

Let me throw some fuel on the party
EAST or WEST
Sad isn’t it

Thanks for that. It was very helpful.

 

[john john]

Thanks for that. It was very helpful.

Good, Bad or No News???
And you know new arrivals will be under major controversy merely bringing it up turns the deliveries into a EAST/WEST thing

Just saying
Sad isn’t it

 

[strangiatotheme]

Anyone know the lineup of new aircraft this fall?

I think it's 12 A321s, three in September and the rest in Oct/Nov/Dec.

 

[john john]

I think it's 12 A321s, three in September and the rest in Oct/Nov/Dec.

And how many a/c are leaving the company are the delivers growth are just replacement a/c

 

[cynic]

I thought they were West replacement aircraft. They were advertising for new hire west FAs again.

 

[roabilly]

It’s really not that hard to understand… it works like this…They buy cool stuff that they can’t afford… YOU pay for it by not being able to afford any cool stuff for yourself!

 

[strangiatotheme]

And how many a/c are leaving the company are the delivers growth are just replacement a/c

Replacements for the retiring west B733s.

 

[LD3]

and use the balance, if any, for general corporate purposes.

In other words, Doug's wallet is about to get fatter....

 

[FutureUScapt]

As another poster stated, there will be 12 A321s joining the fleet starting in September. 10 are destined for the west side, to replace the remaining B733s while 2 will be headed to the east as one B734 is being retired in the fall and another will be retired shortly after the new year.

 

[USFlyer]

Is there an updated fleet listing posted anywhere online? The one on Wikipedia is almost a year old. Will the West be Airbus and 757 only then by later this year?