New York, Nov. 19: Alabama’s pension fund won its bid Monday to become the primary lender for US Airways, giving it the leading role in the airline’s effort to emerge from bankruptcy court.
Separately, United Airlines, which is seeking to avoid the same fate as US Airways, disclosed that its salaried employees had agreed to pay cuts of $ 1.3 billion over the next five and a half years as part of an overall $ 5.8 billion package of concessions from its workers. Pilots for United, part of UAL, also voted overwhelmingly to approve $ 2.2 billion in concessions as their contribution, the AirLine Pilots Association said Monday.
At US Airways, the Retirement Systems of Alabama offered in September to invest $ 240 million for a 37.5 per cent stake in the airline, which had filed for Chapter 11 bankruptcy protection. The fund topped an offer by the Texas Pacific Group, which had structured a turnaround plan. The bankruptcy court had set a deadline of September 15 for other competing offers, but none were received, said the airline, which is based in Arlington, VA.
The $ 26 billion Alabama fund, whose other investments include television stations, golf courses and hotels, also provided $ 500 million in debtor-in-possession financing, of which US Airways has drawn $ 300 million. The fund already holds $ 340 million in aircraft leases with the airline. The fund will be able to fill five of the airline’s 15 board seats.
US Airways said it would file a restructuring plan with the bankruptcy court in mid-December. It still expects to emerge from bankruptcy in the first quarter of 2003.
The restructuring plan is crucial to winning final approval from the Air Transportation Stabilization Board for $ 900 million in loan guarantees. The board has already granted its preliminary approval.