US Airways in market with $1.6b refinancing

Washington DC
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US Airways is in the market with a $1.6 billion debt refinancing, up from previous comments of a $1.1 billion deal.

The senior secured term facility would be split between a $1 billion B1 term loan that matures in May 2019 and a $600 million B2 term loan that matures in November 2016, according to Fitch Ratings, Moody's and Standard and Poor's (S&P).

Proceeds of the deal would repay an outstanding $1.1 billion term loan that matures in March 2014 and about $250 million to the airline's balance sheet, according to Moody's. It would also repay some smaller secured loans, according to Fitch.

Tempe, Arizona-based US Airways declines to comment, but chief financial officer Derek Kerr told Flightglobal in April that it planned to refinance the $1.1 billion outstanding term loan by August.

The new term facility would be secured by the airline's London Heathrow slots, gates and route authorities, its Washington National and New York LaGuardia slots and gates, as well as other certain real estate, equipment, spare parts and engines, according to the ratings agencies.

Fitch, Moody's and S&P rate the debt BB+, B2 and B+, respectively.

Barclays Capital, Citi, Goldman Sachs and Morgan Stanley are joint arrangers, according to a report by Bloomberg.

American Airlines is seeking bankruptcy court approval for a similar up to $3.25 billion secured term financing backed by its South American slots, gates and route authorities. US Airways and American announced plans to merge in February.

United Airlines closed a $1.9 billion secured term refinancing in March. The six-year debt priced at 300bp over Libor.