Company on Track to Emerge from Chapter 11 and Complete Merger
With America West Airlines as Early as Sept. 27, 2005
ARLINGTON, Va., Sept. 16 /PRNewswire-FirstCall/ -- US Airways is now in
the final stages of completing its transformation into the nation's first
full-service, low-cost airline with today's judicial confirmation of its
Chapter 11 Plan of Reorganization (POR).
Judge Stephen S. Mitchell of the U.S. Bankruptcy Court for the Eastern
District of Virginia confirmed the plan at a hearing today, clearing the way
for the US Airways-America West Airlines merger transaction to formally close
by the end of September. The merger will create the nation's fifth-largest
airline, and provide consumers with new domestic and international travel
choices and an extensive route network throughout the U.S., Canada, the
Caribbean, Latin America, and Europe.
Judge Mitchell ruled that all necessary requirements have been met for US
Airways to implement its POR. Every class of creditor for all five debtors --
US Airways Group, Inc., US Airways, Inc., PSA Airlines, Inc., Piedmont
Airlines, Inc., and Material Services Company, Inc. -- in the Chapter 11 cases
that was entitled to vote on the POR, voted in favor by at least 90 percent in
dollar amount and 80 percent in the number of votes cast. Under the terms of
the merger agreement, the transaction can close on the 11th day following
entry of the court's final order confirming the plan. US Airways then will
emerge from Chapter 11 and complete its merger with America West as soon as
Sept. 27, 2005.
"This is a great day for both US Airways and America West," said US
Airways President and Chief Executive Officer Bruce R. Lakefield. "For our
customers, we are about to become the kind of airline that they have been
asking for -- a global carrier offering full-service amenities and simplified
fares. For our employees, this merger will provide more stability and a
chance to be a part of a vibrant new company.
"Through our restructuring, we have reduced our debt, improved our
liquidity and strengthened our balance sheet," Lakefield said. "With the
financial position of other carriers deteriorating, we are pleased that we
will have a very strong cash position, a robust business plan, a low cost
structure, and a strong network that offers our customers an attractive
product and more choices."
Key elements of the plan include:
* Total equity and liquidity agreements to provide the merged airline with
unrestricted cash of approximately $1.7 billion, and a total cash
position of approximately $2.5 billion, including approximately $800
million of restricted cash.
* Investment agreements that total $565 million in new equity and a public
stock offering that is expected to raise $150 million. Support from
business partners and suppliers that will provide in excess of $700
million in cash, and asset sales and sale-leaseback agreements that are
expected to gross $300 million pending consummation of certain of the
transactions.
* Agreement between US Airways and the Pension Benefit Guaranty Corp.
(PBGC), resolving nearly $2.7 billion in claims. The agreement provides
for US Airways to pay the PBGC $13.5 million in cash, in addition to
giving the PBGC a $10 million note and 70 percent of the common stock,
which will be allocated to unsecured creditors.
* The creation of a company with more than $10 billion in annual revenues
and savings of over $600 million annually through synergies associated
with the merger.
* Reinstatement and extension of the Air Transportation Stabilization
Board (ATSB) loans with amortization through 2010.
Lakefield said that the company's full attention now will be on the
completion of the merger, the implementation of consistent customer service
offerings, the building of a unified corporate culture, and the transfer of
headquarters functions to Tempe, Ariz. America West Chairman, President, and
Chief Executive Officer Doug Parker will assume those same responsibilities at
the merged company, with Lakefield serving as non-executive vice chairman of
the board of directors.
"Doug Parker and the management team he has assembled are enthusiastically
working to make sure that the new US Airways is an airline that offers
customer value, and one which our combined work force is proud to represent.
I want to express my heartfelt thanks to our employees, customers, and
business partners for their support of the company throughout this
restructuring. Doug is committed to building upon that deep level of support
and loyalty," Lakefield said.
Lakefield also expressed his appreciation to the ATSB for its support in
working through a number of issues related to the America West and US Airways
federal loan guarantees.
US Airways Group, Inc. and its domestic subsidiaries filed voluntary
petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code on
Sept. 12, 2004.
The merger of US Airways and America West will create the first full-
service, low-cost nationwide airline with amenities that include international
scope, a broad frequent flyer program, airport clubs, assigned seating and
First Class cabin service. The airlines have already introduced the new US
Airways aircraft livery design, and over the coming weeks, will be announcing
more specific customer service enhancements and policies as the airlines
implement the merger.
US Airways is the nation's seventh-largest airline, serving 183
communities in the U.S., Canada, Europe, the Caribbean and Latin America. US
Airways, US Airways Shuttle and the US Airways Express partner carriers
operate approximately 3,200 flights per day.
America West operates over 900 flights daily to more than 90 destinations
in the U.S., Canada, Mexico and Costa Rica. America West offers a range of
services including more destinations than any other low-cost carrier, First
Class cabins, assigned seating, airport clubs and an award-winning frequent
flyer program.
FORWARD-LOOKING STATEMENTS
Certain of the statements contained herein should be considered "forward-
looking statements" within the meaning of the Private Securities Litigation
Reform Act of 1995, which reflect the current views of US Airways Group with
respect to current events and financial performance. You can identify these
statements by forward-looking words such as "may," "will," "expect," "intend,"
"anticipate," "believe," "estimate," "plan," "could," "should," and "continue"
or similar words. These forward-looking statements may also use different
phrases. Such forward-looking statements are and will be, as the case may be,
subject to many risks, uncertainties and factors relating to the company's
operations and business environment which may cause the actual results of the
company to be materially different from any future results, express or
implied, by such forward-looking statements. Factors that could cause actual
results to differ materially from these forward-looking statements include,
but are not limited to, the following: the ability of the company to continue
as a going concern; the ability of the company to obtain and maintain any
necessary financing for operations and other purposes; the ability of the
company to maintain adequate liquidity; the ability of the company to absorb
escalating fuel costs; the company's ability to obtain court approval with
respect to motions in the Chapter 11 proceedings prosecuted by it from time to
time; the ability of the company to consummate its plan of reorganization with
respect to the Chapter 11 proceedings and to consummate all of the
transactions contemplated by the plan of reorganization or upon which
consummation of the plan is be conditioned; the ability of the company to
obtain and maintain normal terms with vendors and service providers; the
company's ability to maintain contracts that are critical to its operations;
the potential adverse impact of the Chapter 11 proceedings on the company's
liquidity or results of operations; the ability of the company to operate
pursuant to the terms of its financing facilities (particularly the financial
covenants); the ability of the company to fund and execute its business plan
during the Chapter 11 proceedings and in the context of its plan of
reorganization and thereafter; the ability of the company to attract, motivate
and/or retain key executives and associates; the ability of the company to
attract and retain customers; the ability of the company to maintain
satisfactory labor relations; demand for transportation in the markets in
which the company operates; economic conditions; labor costs; financing
availability and costs; security-related and insurance costs; competitive
pressures on pricing (particularly from lower-cost competitors) and on demand
(particularly from low-cost carriers and multi-carrier alliances); weather
conditions; government legislation and regulation; impact of the continued
military activities in Iraq; other acts of war or terrorism; and other risks
and uncertainties listed from time to time in the company's reports to the
SEC. There may be other factors not identified above of which the company is
not currently aware that may affect matters discussed in the forward-looking
statements, and may also cause actual results to differ materially from those
discussed. The company assumes no obligation to update such estimates to
reflect actual results, changes in assumptions or changes in other factors
affecting such estimates other than as required by law. Similarly, these and
other factors, including the terms of the plan of reorganization as
consummated, can affect the value of the company's various liabilities, common
stock, and/or other equity securities. Accordingly, the company urges that the
appropriate caution be exercised with respect to existing and future
investments in any of these liabilities and/or securities.
ADDITIONAL INFORMATION AND WHERE TO FIND IT
In connection with the proposed merger transaction, US Airways Group has
filed a Registration Statement on Form S-4 (Registration No. 333-126162),
which includes a proxy statement of America West Holdings, and other documents
with the Securities and Exchange Commission. The proxy statement/prospectus
was mailed to stockholders of America West Holdings after the registration
statement was declared effective by the SEC on August 11, 2005. WE URGE
INVESTORS TO READ THE REGISTRATION STATEMENT AND PROXY STATEMENT/PROSPECTUS
AND OTHER RELATED MATERIALS CAREFULLY BECAUSE THEY CONTAIN IMPORTANT
INFORMATION ABOUT THE PROPOSED TRANSACTION. Investors may obtain free copies
of the registration statement and proxy statement/prospectus as well as other
filed documents containing information about US Airways Group and America West
Holdings at http://www.sec.gov, the SEC's Web site. Free copies of America
West Holdings' SEC filings are also available on America West Holdings' Web
site at http://www.shareholder.com/americawest/edgar.cfm, or by request to
Investor Relations, America West Holdings Corporation, 111 West Rio Salado
Pkwy, Tempe, Arizona 85281. Free copies of US Airways Group's SEC filings are
also available on US Airways Group's Web site at
http://investor.usairways.com/edgar.cfm or by request to Investor Relations,
US Airways Group, Inc., 2345 Crystal Drive, Arlington, VA 22227.
This communication shall not constitute an offer to sell or the
solicitation of an offer to buy any securities, nor shall there be any sale of
securities in any jurisdiction in which such offer, solicitation or sale would
be unlawful prior to registration or qualification under the securities laws
of any such jurisdiction. No offering of securities shall be made except by
means of a prospectus meeting the requirements of Section 10 of the Securities
Act of 1933, as amended.
PARTICIPANTS IN THE SOLICITATION
America West Holdings, US Airways Group and their respective executive
officers and directors may be deemed, under SEC rules, to be participants in
the solicitation of proxies from America West Holdings' stockholders with
respect to the proposed transaction. Information regarding the officers and
directors of America West Holdings is included in its definitive proxy
statement for its 2005 Annual Meeting filed with the SEC on April 15, 2005.
Information regarding the officers and directors of US Airways Group is
included in its 2004 Annual Report filed with the SEC on Form 10-K on March 1,
2005. More detailed information regarding the identity of potential
participants, and their interests in the solicitation, is set forth in the
registration statement and proxy statement and other materials filed with the
SEC in connection with the proposed transaction.
SOURCE US Airways
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Related links:
http://www.usairways.com
CONTACT:
David Castelveter of US Airways,
+1-703-872-5100
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