U.S. Bankruptcy Court
Judge Stephen Mitchell today approved US Airways Group’s agreement
with Republic Airways Holding, Inc., and its majority shareholder, Wexford
Capital LLC, on an equity and financing package that includes a $125
million investment upon US Airways’ emergence from Chapter 11, in addition
to options for obtaining $110 million of other liquidity enhancements that
would be available prior to emergence to assist the airline in completing
its restructuring. “The court’s approval today builds momentum toward the successful
implementation of our Plan of Reorganization and emergence from Chapter
11,” said Bruce R. Lakefield, US Airways president and chief executive
officer. “This agreement with Republic is another important step in our
efforts to raise sufficient capital to remain a strong competitor in the
marketplace.”

The agreement is contingent on US Airways securing $350 million in new
cash investment (including the $125 million from Republic and the $125
million previously secured from Eastshore Aviation, LLC) to finance the US
Airways Plan of Reorganization (POR), and other conditions. It also
provides for representation on the US Airways board of directors, and
requires US Airways to amend and restate its existing jet service
agreement with Chautauqua, to assume that agreement and to enter into a
new jet service agreement with Republic for regional jet (RJ) feed using
the Embraer (EMB) 170 and 190 aircraft under the US Airways Express brand.

In addition, the agreement includes options for additional US Airways
financing subject to the consent and approval of the Air Transportation
Stabilization Board, including:

* US Airways may exercise an option to obtain approximately $110 million
through the sale of certain assets, including 10 EMB-170 aircraft owned by
US Airways; three EMB-170 aircraft currently committed for delivery to US
Airways; other EMB-170-related assets; 113 commuter slots at Ronald Reagan
Washington National Airport; and 24 commuter slots at New York’s LaGuardia
airport. * US Airways would assign to Republic leases for an additional 15
EMB-170 aircraft, and would work with Republic to locate an Embraer heavy
maintenance facility at an agreed upon location within the US Airways
network. Republic would enter into an RJ service agreement that would
continue the operation of the aircraft as US Airways Express. Republic
also would simultaneously lease back the Washington and LaGuardia slots to
US Airways. At any time on or after the second anniversary of the slots
sale/leaseback agreement, US Airways would have the right to repurchase
the slots at a predetermined price. * After the effective date of US
Airways’ Chapter 11 POR, if US Airways does not exercise the slots
sale/leaseback option, Republic could purchase/assume debt and leases for
all 28 EMB-170 aircraft and to fly them as US Airways Express. The net
effect would be the sale of US Airways’ MidAtlantic aircraft to Republic.
If either option is exercised, Republic will comply with the applicable
provisions of all existing agreements with US Airways regarding
MidAtlantic. The aircraft would continue to fly under the US Airways
Express brand, operated by Republic.

The court also extended until May 31, 2005, the date for US Airways to
have exclusive rights to file a POR. The request was supported by the
company’s unsecured creditors committee and was unopposed by other
interested parties.
——-