- The Washington Times - Wednesday, February 12, 2003

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.

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