Objections raised against US Airways lease proposal

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Objections raised against US Airways lease proposal  =

 =


Friday September 20, 3:37 PM EDT =


By Julie MacIntosh

NEW YORK, Sept 20 (Reuters) - A group of banks, aircraft leasing firms an=
d trustees have voiced a resounding objection to US Airways Group's (UAWG=
Q) request that a bankruptcy court let it reject leases on some of its ai=
rplanes and abandon others to cut costs.

Arlington, Virginia-based US Airways, which filed for Chapter 11 bankrupt=
cy protection in August, already has permission to turn back leases on 67=
 airplanes and their engines to save hundreds of millions of dollars and =
trim unneeded passenger capacity.

US Airways asked the Bankruptcy Court for the Eastern District of Virgini=
a earlier this month to let it make further cuts to its costly airplane l=
ease obligations.

But the airline did not specify which leases out of a potential pool of 1=
50 could be affected, or when the moves could take place, omissions that =
have irked its creditors.

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If US Airways won permission to reject leases on the equipment, it could =
whittle down its current fleet of about 280 large aircraft and save the e=
mbattled carrier a chunk of cash.

But the move would also cut jobs for pilots and flight attendants at the =
airline, and leave creditors in the lurch, with little chance of passing =
the abandoned planes off to other customers during the industry's deep do=
wnturn.

Cuts in capacity by the nation's major airlines have rendered hundreds of=
 airplanes useless. More than 550 aircraft sat parked in the deserts of t=
he Western U.S. during August, just less than 10 percent of the entire av=
ailable fleet, Lehman Brothers analyst Gary Chase estimated.

The list of firms objecting to US Airways' request late this week include=
d General Electric Co. (GE), which said in a court filing that it may be =
"financially at risk as a guarantor" if US Airways fails to pay rent on i=
ts leased planes or abandons other lease obligations.

The manufacturing and services conglomerate, which also provides various =
types of financing, said in the filing that it has a stake in transaction=
s with US Airways involving 13 different Boeing 737-400 aircraft.

An attorney for GE said she was not aware that any monetary value for GE'=
s exposure to the leases had been determined. A spokesman for GE was not =
available for further comment.

Creditors also objected to the vagueness of US Airways' request, and said=
 the airline's motion made no mention of whether or when any specific air=
craft would be returned.

US Airways' restructuring agreement currently allows it to cut its fleet =
size to 245 during its bankruptcy.

A spokesman at US Airways could not be reached for comment. =



=A92002 Reuters Limited. =


Roger
EWROPS

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