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November 28, 2004

US Airways & GE Reach Financing Agreement

It was reported on Friday that US Airways and General Electric, the airline's largest creditor, have agreed on an aircraft leasing and financing deal that will free up $140 million in cash for US Airways in an effort to heal the struggling airline

The agreement will also reportedly save US Airways, which remains under bankruptcy court protection, more than $80 million per year in the future.  As part of the deal, US Airways will also be able to lease up to 31 new 70 and 90-seat regional jets over the next three years from GE in an effort to jump start the airline's stalling strategy to expand its flight offerings to smaller markets. 

In order for the deal to take effect, however, US Airways will have to jump a few hurdles.  First off, it must acquire apprvoal for the deal from the bankruptcy court by December 17.  Once approval is obtained, the airline then must then achieve certain cost cutting requirements by mid-January.  This may be difficult considering much of the savings will need to come from concessions made by the airline's employees.  Finally, the agreement requires the airline to step out of bankruptcy court protection by June 30.

Posted by Matt Rutlin at 05:29 PM in Corporations | Permalink


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