US Airways raises $404 million, reportedly in leaseback deal

November 17, 2001|By KNIGHT RIDDER/TRIBUNE

US Airways said yesterday that it has arranged $404 million in financing and will end the year with more than $1 billion in cash, which could help it survive the airline industry's continuing financial crisis.

Sources said the financing was provided by GE Capital, the financing arm of General Electric Co. The deal involved buying airplanes and engines owned by US Airways, then leasing them back to the airline.

US Airways announced the financing arrangement after the stock market closed. It would not specify the source of the money. GE Capital could not be reached for comment late yesterday.

"This buys them time," Arthur Calavritinos, portfolio manager of high-yield funds for John Hancock Funds in Boston, said of the carrier. "It means a lot."

Most airlines have been seeking to raise cash to pay expenses because they are losing millions of dollars daily, as passengers remain scarce due to the weak economy and lingering fears of flying after the Sept. 11 terrorist attacks. Carriers have sought to conserve cash by chopping routes and workers.

After a year of sharp declines, airline stocks rebounded slightly during the past week because of lower fuel prices, progress in the Afghan war and passage of the airline security bill.

US Airways led the pack, rising 55 percent for the week. It rose 22 percent yesterday to close at $6.97 a share, down 83 percent from $40.50 at the start of the year.

US Airways Chief Executive Officer Rakesh Gangwal met yesterday with union leaders at the airline's headquarters in Arlington, Va. A union source said the meeting represented "an attempt to maintain a dialogue with the labor groups," which may soon get additional details on the airline's financial performance.

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