US Airways Sells $777 Million Federal Loan

US Airways Group Inc. said Wednesday it had sold a $777 million loan, almost all of which was secured by the federal government, at a slight premium to 13 undisclosed fixed-income investors.

The debt - $752 million of which was backed by the government - was granted by a government loan program to US Airways and America West after the 2001 terrorist attacks. America West Airlines Inc. has since acquired US Airways, which had been in bankruptcy court until last month, and assumed its name.

The Tempe, Ariz.-based airline said the total current outstanding balance of the loans is $832 million, with $55 million held by two other existing investors.

The new US Airways said terms associated with the loans remain unchanged, with the former America West loan ending in 2008 and the former US Airways loan terminating in 2010.

Following the attacks, the federal government made the Air Transportation Stabilization Board's loan program available to all airlines. Traditional fund raising was halted during that time, as private capital markets were not functioning due to the terrorist attacks.

"Not only has the government received full payment of its original loans, with interest and fees totaling approximately $180 million, taxpayers also received an additional $116 million earlier this month when the ATSB sold warrants associated with America West's original loan," US Airways said Wednesday.

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