Airfinance Journal: Breaking out from Chapter 11

Featured in Airfinance Journal - June 2003 (Number 261)

US Airways went into Chapter 11 in August, but just eight months later the carrier emerged from bankruptcy establishing a template for other airlines. The Team behind the restructuring revealed their secrets to Steven Josselson.

When US Airways filed for Chapter 11 bankruptcy protection at the Alexandria, Virginia, bankruptcy court on a quiet Sunday night in August 2002, at first glance it looked like the start of the end for the airline.

The carrier's petitions listed assets of about $7.81 billion. It had already tried-- and failed -- to renegotiate contracts and had developed a poor relationship with its unions.

But if you looked at the team managing the turnaround, the odds suddenly tilted in the airline's favour.

With Texas Pacific Group -- the most successful airline investors ever -- already lined up to lead the debtor-in-possession (DIP) loan, David Siegel, a new CEO with experience of restructuring Continental, and John Luth, CEO of the Seabury Group, a man who had already turned around two airlines, the restructuring had to be taken seriously.

While everyone involved in the restructuring says it was tough, on March 31 it became the first US carrier to emerge from bankruptcy during this downturn and has created a template for others to follow...

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Airfinance Journal: June 2003