US Airways wins RJ reprieve
US Airways may resume taking deliveries of Embraer and Bombardier regional jets if the airline’s employee unions accept more cost-cutting measures, thanks to a tentative agreement by GE Capital Aviation Services (GECAS) to lease another thirty-one 70- and 90-seat jets over the next three years. Last fall US Airways had to stop deliveries of Embraer 170s at 22 after it fell into bankruptcy for the second time. The deal, which also involves a pledge by GE Engine Services to restructure engine maintenance contracts, would grant US Airways a $55 million bridge loan and allow it to delay aircraft debt and lease payments for six months, resulting in some $140 million in short-term liquidity. The airline said it expects the agreement to save it some $80 million a year.
Aside from employee concessions, GECAS will require US Airways to meet other unnamed cost reduction and restructuring goals by January 14 and exit bankruptcy by June 30. The agreement calls for the return of 10 Airbus 319s this year and 15 Boeing 737-300s next year and in 2007. Under the deal, US Airways would issue to GECAS a 15-year convertible note for between $125 and $216 million, depending on future lease options chosen by the airline.