- The Washington Times - Wednesday, January 12, 2005

US Airways Group Inc. plans to present a proposed agreement with the Air Transportation Stabilization Board to a bankruptcy judge today that would allow the cash-strapped airline to continue operating.

The decision by the ATSB is one of two hurdles US Airways, based in Arlington must overcome this week if it hopes to emerge from its second bankruptcy in two years.

The airline’s current agreement with the ATSB, which guaranteed a $900 million loan to US Airways that it uses to fund operations, expires tomorrow.

The ATSB requires the airline to maintain a specific amount of cash, and US Airways would not be able to have access to its own money beyond tomorrow without an extension.

US Airways and the ATSB, the agency created to oversee a $15 billion bailout of the airline industry, still were negotiating the terms of the extension late yesterday.

Key elements in the extension include the length of the new deal and the amount of money US Airways must have on hand.

Bankruptcy Judge Stephen Mitchell must approve the airline’s extension with the ATSB today.

In e-mail to employees, US Airways Vice President Bruce Ashby said the company has reason to be optimistic.

“We have turned the corner with our labor groups, and we are now engaged together in the competitive fight that the company faces. We are leaner, tougher, and ready to win,” he wrote.

US Airways yesterday said Mr. Ashby, senior vice president of alliances and president of US Airways Express, will replace Ben Baldanza as senior vice president of marketing and planning.

Mr. Baldanza resigned to become president at Spirit Airlines, a low-cost carrier based in Miramar, Fla.

Mr. Baldanza, who will be in charge of operations at Spirit beginning Jan. 24, is one of five executives whose departure US Airways announced yesterday.

Mr. Ashby said US Airways is undeterred by competition from Delta Air Lines or Southwest Airlines. Delta last week cut the cost of a range of last-minute fares to recapture the business-travel market, and Southwest announced it will begin offering service in Pittsburgh in May. US Airways is the dominant carrier in Pittsburgh.

“Delta’s new pricing structure and Southwest’s growth are not unexpected or unanticipated by this management team, and they will not be obstacles to our success,” Mr. Ashby wrote.

US Airways, meanwhile, continues to search for funding from investors. The airline must come up with $100 million in new equity from investors or cut costs by another $100 million to meet terms of an agreement it signed last month with GE Capital Aviation Services Inc.

GE Capital Aviation Services gave US Airways a $140 million loan and allowed the airline to defer lease payments on planes due over the next six months. The agreement, approved by Judge Mitchell, also requires US Airways to secure $100 million in new investments or cut costs by the same amount.

Attracting new investments “is a priority for us,” US Airways spokesman David Castelveter said.

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