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 US Airways Group Inc. said Thursday it has boosted its cash reserve, raising about $950 million in financing and near-term liquidity commitments designed to help the airline weather a potential travel slowdown.
The airline, which also said it lost $865 million in the third quarter due to high fuel prices, closed on $800 million of the financing on Oct. 20 and used $400 million of the proceeds to prepay the company's $1.6 billion bank debt facility. In exchange for that prepayment, the unrestricted cash covenant contained in the bank debt facility loan agreement was reduced from $1.25 billion to $850 million, freeing up more cash for operations. Company CEO Doug Parker in a statement said that the announcement "confirms that US Airways' financial footing is solid," noting that the airline was able to complete the financing "in the midst of unprecedented global financial unrest." As of Sept. 30 US Airways said it has $2.3 billion in total cash and investments. Up to $35 million in loans came from regional partner Republic Airways Holdings Inc., which in a separate statement said it agreed to provide the carrier with $10 million in funding on Oct. 20, followed by a second $25 million that can be funded in the first quarter of 2009. Republic's CEO Bryan Bedford said the financing "simply reaffirms our commitment to US Airways and its ability to continue managing through uncertain economic times for our industry." Beaten down by record oil prices earlier in the year and an expected travel slowdown now, airlines have been scrambling to boost their liquidity. Earlier this month, United Airlines Inc.'s parent, UAL Corp., secured $275 million in fresh cash via a series of transactions. A Seabury Group LLC team led by John Luth and Chris Chaput served as financial adviser to US Airways, while Skadden, Arps, Slate, Meagher & Flom LLP's Seth Jacobson, David Reamer, Kristine Dunn, Roger Aaron and Sean Doyle provided legal advice. - Lou Whiteman See US Airways press release announcing financing Categories Deal Video
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