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US Airways Gets Second $125 Million Equity Commitment

Staff Writer
Published: 2005-03-15

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US Airways has reached an agreement with Republic Airways Holding and its majority shareholder, Wexford Capital LLC.

The agreement is on an equity and financing package that includes a $125 million investment upon US Airways' emergence from Chapter 11, in addition to options for obtaining $110 million of other liquidity enhancements that would be available prior to emergence to assist the airline in completing its restructuring.

Terms of the agreement are being filed with the U.S. Bankruptcy Court for the Eastern District of Virginia in Alexandria. US Airways will seek the court's approval at the next monthly omnibus hearing scheduled for its case, which is set for Thursday, March 31, 2005, at 9:30 a.m., Eastern time.

"We are very pleased to have secured the support of a second, well- regarded investor and airline partner to help us build and finance our plan of reorganization," said Bruce R. Lakefield, US Airways president and chief executive officer. "The Republic management team has a proven track record and we look forward to an expanded relationship. We are well on our way to securing at least $350 million in new capital and continue to finalize our business plan that will leverage our competitive cost structure and strong market positions in the eastern U.S. and the Caribbean."

Wexford is based in Greenwich, Conn., and holds a majority interest in Republic, which operates Chautauqua Airlines and Republic Airlines. The proposed $125 million equity investment is contingent on US Airways securing a total of $350 million in new cash investment (including the $125 million from Republic and the $125 million previously secured from Eastshore Aviation, LLC) to finance the US Airways Plan of Reorganization and other conditions, including Republic being satisfied with US Airways' business plan. The agreement also provides for comparable treatment -- such as representation on the US Airways board of directors -- as that provided to Eastshore. The agreement also includes a commitment by US Airways to amend and restate its existing jet service agreement with Chautauqua, to assume that agreement and to enter into a new jet service agreement with Republic for regional jet feed using the Embraer (EMB) 170 and 190 aircraft under the US Airways Express brand.

"We appreciate all of the hard work US Airways and its employees have accomplished thus far. We recognize there is more work to be completed but we are pleased we are able to assist US Airways in reaching the final phase of its reorganization process," said Bryan Bedford, chairman, president, and CEO of Republic Airways Holdings.

"This transaction provides us with new equity, reduced debt, enhanced liquidity, and a strengthened relationship with a key regional airline partner, as well as efficiencies in running the business that will allow us to focus more of our resources on the mainline operations," said Lakefield. "Overall, we will have both flexibility and a stronger regional jet network that will improve both our bottom line and service to our customers."

In light of this new equity commitment and substantial progress being made in US Airways' restructuring, General Electric's GECAS subsidiary and other affiliates have agreed to US Airways' request to extend the date by which the company will file its Plan of Reorganization until April 15, 2005.

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