ALEXANDRIA, Va. (AP) -- A judge on Tuesday allowed bankrupt US Airways Group Inc. to send its reorganization plan to creditors for a vote, moving the airline one step closer to emerging from Chapter 11 protection.
U.S. Bankruptcy Judge Stephen Mitchell scheduled a hearing for Sept. 15 to consider final court approval of the plan, which calls for a merger between US Airways and America West Airlines, the nation's seventh and eighth-largest airlines, respectively. The hearing is two days after America West shareholders are scheduled to vote on the proposed merger.
The airlines have already received a variety of regulatory approvals; if Mitchell approves the reorganization plan at the September hearing, US Airways would be free to emerge from bankruptcy in late September or early October and close on the merger with America West.
Mitchell on Tuesday approved the airline's disclosure statement, which will be sent to creditors along with their ballot as they consider whether to vote for the reorganization.
The hearing left unresolved several objections from the airline's unions. Labor groups are upset that US Airways wants to scale back a proposed profit-sharing plan for workers.
US Airways' unions agreed to sharp cuts in pay and benefits as part of the company's restructuring; one of the few items they received in return was a relatively generous profit-sharing plan.
US Airways contends that the profit-sharing plan must be scaled back to accommodate new investors who are putting up $565 million to finance the merger and says the profit-sharing plan was always subject to revision depending on the level of outside investment it could attract.
Unions are also upset that the plan of reorganization eliminates their representation on the board of directors.
''We have some very serious concerns about the way our union has been treated, and how some of our issues have almost been disregarded by management,'' said Jack Stephan, spokesman for the US Airways unit of the Air Line Pilots Association.
Mitchell urged the airline and unions to resolve their dispute before the Sept. 15 hearing. If the issues remain unresolved, Mitchell would have to rule on whether the unions' objections are valid, which could complicate US Airways' emergence.
US Airways Chief Executive Bruce Lakefield said Tuesday's hearing was ''another good step'' in the airline's path to reorganization.
Under the plan of reorganization, unsecured creditors would receive 10 cents on the dollar for claims smaller than $50,000 and stock in the reorganized company for larger claims. The airline estimates that the stock would be worth anywhere from 3 cents to 17 cents on the dollar of a given creditors' claims.
The airline has no way of knowing what stock in the new company will be worth when it begins to trade publicly, but it has estimated a range of $18 to $33 a share.
Perhaps the best measure of the stock's value is by looking at shares of America West, which will be converted into US Airways shares following the merger.
America West traded at $8.04 a share Tuesday on the New York Stock Exchange. At that price, converted shares in the new US Airways would be worth $19.49.
Copyright 2005 Associated Press
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