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US Airways won a $900 million loan guarantee from the federal - 500 Beiträge pro Seite


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Feb 12, 2003 (The Washington Times - Knight Ridder/Tribune Business News via
COMTEX) -- US Airways won a $900 million loan guarantee from the federal
government yesterday that the airline says is crucial to its chances for
emerging from bankruptcy.

The announcement from the Air Transportation Stabilization Board (ATSB) comes
after a US Airways financial report last week showing that the airline lost $1.6
billion last year.

The loan guarantee means that the government agrees to repay banks up to $900
million if US Airways defaults on its loans.

US Airways` "management has pursued a disciplined approach to executing its
restructuring plan and reacting to changing economic conditions in the airline
industry," said Daniel Montgomery, ATSB executive director, in a letter to the
airline`s president.

Lending institutions were withholding $1 billion in loans until the airline won
the guarantee, while corporate partners were withholding investments.

"In the board`s view, the applicant`s management has presented a business plan
that reasonably positions the applicant to meet the challenges and risks of this
industry and to achieve financial stability over the term of the proposed loan,"
the ATSB letter said.

The guarantee, however, includes tough conditions. Among them, the
Arlington-based airline must finalize deals on its concessions, it must obtain
legal clearance to eliminate its pilots union retirement plan, and it must
obtain bankruptcy court approval for its reorganization plan.

The three-member ATSB also reserved a right to withdraw from its loan guarantee
approval if US Airways` financial condition worsens or if it appears that the
airline cannot repay its loans. It approved US Airways` application unanimously.

Congress established the ATSB after the September 11 attacks to help airlines
regain financial stability by offering them loan guarantees. US Airways was
severely hurt by the terrorist attacks because it is the biggest airline
operating out of Ronald Reagan Washington National Airport, which was closed for
21 days after September 11.

US Airways has been forced to make "difficult decisions that were necessary to
ensure that our airline would not be a victim of September 11 and, instead,
would be shaped into a vigorous competitor," said David Siegel, US Airways`
president and chief executive officer. "We are on track to emerge from Chapter
11 protection by March 31, and while there is still much work to be done,
today`s vote of support from the ATSB is another momentum-building achievement
in that effort."

The ATSB conditionally accepted US Airways` loan-guarantee application in July,
only weeks before it filed for bankruptcy protection.

The airline has agreed to cut costs by $1.8 billion and to give the government
warrants to purchase 10 percent of the company.

US Airways is the nation`s seventh-largest airline. It employs about 33,000
people and operates more than 3,400 daily flights.


By Tom Ramstack
To see more of The Washington Times, or to subscribe to the newspaper, go to
http://www.washtimes.com

(c) 2003, The Washington Times. Distributed by Knight Ridder/Tribune Business
News.

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