US Airways refinances $1.6bn debt

27th Mar 2007

US Airways Group has announced that it has completed a $1.6 billion debt
refinancing transaction.The new loan, which was arranged by Citigroup Global
Markets Inc. and Morgan Stanley Senior Funding, Inc., as Joint Lead Arrangers,
will bear interest at LIBOR plus 2.50 percent.  The applicable margin is
reduced as the loan is paid down or as the company’s credit rating improves.
It can be as low as LIBOR plus 2.00 percent if the loan balance is under
$600 million or the loan facility credit rating, as determined by Moody’s
Investor Services and Standard & Poor’s, improves to Ba3 and BB-,
respectively.  The term of the loan is seven years with substantially all of
the principal amount payable at maturity.  The loan requires the company to
maintain a minimum level of unrestricted cash and a minimum collateral
coverage ratio.

The refinancing improves liquidity over the next seven years by reducing
principal payments and lowering near-term interest expense.  Upon funding, the
Company extinguished two separate debt facilities:  a $1.25 billion senior
secured credit facility and a $325 million unsecured debt facility.  The
additional $25 million will be used for general corporate purposes.  The new
loan will reduce the blended interest margin by over 100 basis points.

  The refinancing will reduce the Company’s debt amortization by
approximately $92 million annually from 2008 - 2010 and $1.234 billion in
2011.  In addition, interest expense will be reduced by approximately
$14 million in 2007 and $13 million in 2008.

  Senior Vice President and Chief Financial Officer Derek Kerr said, “We are
extremely pleased with the outcome of this refinancing.  Today’s refinancing
enables us to continue to strengthen our balance sheet as we work to complete
our integration and meet our primary objectives of reducing borrowing costs,
deferring debt maturities and reducing our covenant package.  Completing this
transaction provides further evidence of the financial market’s confidence in
the new US Airways.”


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