Judge Approves US Airways' Restructuring Plan
A U.S. Bankruptcy Court judge yesterday approved US Airways' plan of reorganization, keeping the carrier on track to emerge from bankruptcy protection by the end of the month.
"With the nation on the verge of war and the economy impacted by geopolitical uncertainties, the court's approval today is absolutely critical to our efforts to complete our restructuring by March 31," said US Airways president and CEO David Siegel in a statement following the decision.
Emerging from bankruptcy will allow US Airways to tap into a $1 billion loan package backed by the Air Transportation Stabilization Board and $240 million from the Retirement Systems of Alabama. RSA will hold a 37 percent stake in the company and occupy a majority of a reconstituted board of directors. US Airways employee representatives will hold four board seats.
Despite yesterday's positive ruling, US Airways still has hurdles to clear before the March 31 deadline. It must finalize an agreement with a new credit card processor and resolve a contentious pilot pension issue.
"We are in an incredible period of labor compliancy," said Michael Boult, COO of Eclipse Advisors, a Rosenbluth International technology unit. "There is nothing that tells me US Airways cannot get it done."
Some travel managers also are confident in US Airways' ability to remain viable. "US Airways always has been one of our best partners and easier to deal with than anyone. They went ahead and bit the bullet by being first to enter bankruptcy and it looks as if they will be the first to emerge," said one, speaking anonymously. "We did not see our volume decrease when they went into Chapter 11 and what they are doing with United could potentially lead to more opportunity to use deeper US Airways discounts on United services, especially on the transatlantic."
"They may be a few weeks behind their scripted plan because of pilot pension issues but their labor groups favored jobs with fewer benefits over no jobs," added Bill Patient, travel buyer at Atofina Chemicals, based in US Airways' Philadelphia hub. "I am more concerned about United."