America West Applies For Federal Loan Guarantees

America West Airlines (NYSE: AWA) today
filed an application for $400 million in federal loan guarantees under the Air
Transportation Safety and System Stabilization Act, citing its success as a
post-deregulation carrier, its solid financial and competitive position prior
to the tragedies of September 11 and a business plan that clearly demonstrates
the airline`s ability to repay the loan.  The requested government assistance
would be the catalyst for nearly $1 billion in financial support negotiated by
America West conditioned on the availability of the loan guarantees.
 
“America West Airlines is the success story of deregulation and an
integral part of our nation`s commercial aviation system,” said W. Douglas
Parker, chairman, president and chief executive officer.  “On September 10,
America West was confidently positioned to compete through a difficult
economic downturn.  We had an established and successful strategy and a
history of demonstrated financial success, our operating performance had
improved dramatically and our relative earnings performance had returned to be
among the industry leaders.  Most importantly, we had arranged for a liquidity
facility that was sufficient to weather the most severe of projected economic
downturns.

“Unfortunately, the tragic events of September 11 have had a significant,
adverse impact on our financial performance and liquidity position,” Parker
added.  “As the direct result of the terrorist attacks, the arranged liquidity
facility will not be completed and, under prevailing economic conditions,
other private financing alternatives are not available.  Congress and the
Administration included the Air Carrier Loan Guarantee Program in the
Stabilization Act to assist viable airlines, such as America West, which have
suffered financial challenges as a result of September 11.  The loan
guarantees would make available approximately $1 billion of financial support
for America West.”

America West has negotiated a $426 million loan and is requesting Air
Transport Stabilization Board loan guarantees in the amount of $400 million to
secure a loan tranche in that amount.  The guarantee would be supported by an
at-risk $26 million loan tranche, $135 million of additional aircraft
financing and an additional $450 million in concessions, financing and
assistance from key constituents.  The Stabilization Board would participate
in the success of America West through a guarantee fee structure that
increases as the airline becomes more profitable.
 
America West`s loan application includes a detailed and well-documented
seven-year business plan. Highlights of the business plan include:


* Value creation through concessions and contributions.  The plan
  includes approximately $600 million of concessions, financing and
  contributions from key constituents of America West, including aircraft
  lessors, manufacturers, creditors, vendors, key state and local
  governments, shareholders and employees, the majority of which are
  contingent upon the loan guarantee.


* Conservative economic rebound assumptions.  The plan assumes the
  economic rebound is slow and gradual.  America West`s industry revenue
  assumptions are below current Wall Street consensus estimates.

ADVERTISEMENT

* A clear demonstration of America West`s ability to repay the
  guaranteed loan.  The concessions and contributions are designed to allow
  America West to weather the slow economic recovery and conserve cash.  As
  the economy rebounds, the loan would be repaid ratably from 2005 to 2008
  while the company retains comfortable cash balances.


“America West remains a successful, competitive and well-managed airline,”
said Parker.  “We provide transportation to 20 million passengers every year.
As the nation`s largest low-cost hub and spoke carrier, America West provides
marketplace discipline to larger, higher cost airlines throughout the United
States and, as a result, we deliver low price competition, choice and hundreds
of millions of dollars of benefits annually to consumers.

“We have a proven business strategy and a demonstrated ability to
outperform our competitors,” Parker reiterated.  “But with the dramatic
changes in the economic environment following the terrorist attacks, proven
strategies and outperforming competitors is not enough.  A loan guarantee
under the new legislation, coupled with the additional financial assistance
that we have negotiated, is the most effective solution to America West`s
post-September 11 liquidity challenges.  We believe that the approval of
America West`s loan guarantee application is in the best interests of the
airline industry, the traveling public and the economy, and we look forward to
working with the Stabilization Board over the next few weeks to complete the
process.”

——-