US Airways said on Monday night that Republic Airways Holding had agreed to invest US$125 million in the airline once it emerges from bankruptcy protection. It was the second such investment that US Airways has obtained in the last month and greatly increases its chances of surviving.
Under the agreement, US Airways could sell some of its slots at La Guardia Airport to Republic, the parent company of Chautauqua Airlines and Republic Airlines. Both Chautauqua and Republic fly as US Airways Express.
When US Airways sought bankruptcy protection on Sept. 12, for the second time in two years, a number of industry analysts said that the airline could be forced to liquidate. But last month, the airline, the US' seventh-largest carrier, arranged a US$125 million investment by Air Wisconsin, another regional airline.
US Airways said that the deal announced on Monday with Republic was contingent on its ability to raise US$350 million in exit financing. That leaves the airline with about US$100 million left to raise.
The deal with Republic requires the approval of the US Bankruptcy Court in Alexandria, Virginia, near US Airways' headquarters in Arlington. The airline was supposed to submit a reorganization plan yesterday, but said its lenders had agreed to a one-month delay. It aims to emerge from bankruptcy on June 30.
US Airways gave Republic the right to approve its business plan and said Republic could lend it a further US$110 million to use while it reorganizes. Under those terms, US Airways said it could sell Republic 24 commuter slots at La Guardia, and 113 at Reagan National Airport in Washington. If that happens, US Airways could lease back its use of the slots, and repurchase them in two years.
US Airways had tried to sell those slots before it sought bankruptcy protection but failed to reach a deal.