IN RE US AIRWAYS, INC. (Bankr.E.D.Va. 2005)


In re: US AIRWAYS, INC., et al.,[1] Chapter 11, Debtors.

Case No. 04-13819, Jointly Administered.United States Bankruptcy Court, E.D. Virginia, Alexandria Division.
August 18, 2005.

[1] The Debtors are the following entities: US Airways, Inc., US Airways Group, Inc., PSA Airlines, Inc., Piedmont Airlines, Inc. and Material Services Company, Inc.

Brian P. Leitch, Esq., Daniel M. Lewis, Esq., Michael J. Canning, Esq., ARNOLD PORTER LLP, Denver, Colorado, and Washington, DC, and New York, Lawrence E. Rifken, Esq. (VSB No. 29037), Douglas M. Foley, Esq. (VSB No. 34364), David I. Swan, Esq., McGUIREWOODS LLP, McLean, Virginia, Counsel to the Debtors and Debtors-in-Possession.

ORDER GRANTING THE DEBTORS’ THIRD MOTION TO REJECT CERTAIN LEASED AIRCRAFT EQUIPMENT PURSUANT TO 11 U.S.C. § 365
STEPHEN MITCHELL, Bankruptcy Judge

THIS MATTER having come before the Court upon the third motion (the “Motion”)[2] of the debtors and debtors-in-possession in the above-captioned cases for an order pursuant to 11 U.S.C. § 365, (a) authorizing the Debtors to reject the leases identified on

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Exhibit 1 hereto (collectively, the “Leases”) effective as of the Rejection Date (defined herein); (b) ordering that the holder of any claim arising from any rejection authorized herein shall be required to file a proof of claim on account of such claim against the Debtors on or before 30 days following the Rejection Date (the “Rejection Claim Bar Date”); and (c) granting such other and further relief as this Court may deem just and proper; the Court finds that (i) it has jurisdiction over the matters raised in the Motion pursuant to 28 U.S.C. § 157 and 1334; (ii) this is a core proceeding pursuant to 28 U.S.C. § 157(b)(2); (iii) the airframe bearing U.S. registration number N519AU and the engines related thereto, all as identified on Exhibit 1
attached hereto (collectively, the “N519AU Leased Aircraft Equipment”), together with the applicable Lease, are currently subject to that certain Stipulation, Agreement and Order Providing for Section 1110(b) Extension Regarding Aircraft Agreements with Wachovia Bank, National Association, as Equipment Trust Trustee (“Wachovia”), between the Debtors and Wachovia, which was approved by order of the Court entered on December 20, 2004 (Docket No. 1441) (the “N519AU Section 1110(b) Agreement”); (iv) the airframe bearing U.S. registration number N520AU and the engines related thereto, all as identified on Exhibit 1
attached hereto (collectively, the “N520AU Leased Aircraft Equipment”), together with the applicable Lease, are currently subject to that certain Stipulation, Agreement and Order Providing for Section 1110(b) Extension Regarding Aircraft Agreements with Wachovia Bank, National Association, as Equipment Trust Trustee, between the Debtors and Wachovia, which was approved by order of the Court entered on December 20, 2004 (Docket No. 1442) (the “N520AU Section 1110(b) Agreement”); (v) the airframe bearing U.S. registration number N521AU and engines related thereto, all as identified on Exhibit 1 attached hereto (collectively, the “N521AU Leased Aircraft Equipment,” and together with the N519AU

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Leased Aircraft Equipment and the N520AU Leased Aircraft Equipment, the “Leased Aircraft Equipment”), together with the applicable Lease, are currently subject to that certain Stipulation, Agreement and Order Providing for Section 1110(b) Extension Regarding Aircraft Agreements with Wachovia Bank, National Association, as Equipment Trust Trustee, between the Debtors and Wachovia, which was approved by order of the Court entered on December 20, 2004 (Docket No. 1445) (the “N521AU Section 1110(b) Agreement,” and together with the N519AU Section 1110(b) Agreement and the N520AU Section 1110(b) Agreement, the “Section 1110(b) Agreements”); (vi) the relief requested in the Motion is in the best interests of the Debtors, their estates and their creditors; (vii) proper and adequate notice of the Motion and the hearing thereon has been given and that no other or further notice is necessary; and (vii) good and sufficient cause exists for the granting of the relief requested in the Motion after having given due deliberation upon the Motion and all of the proceedings had before the Court in connection with the Motion. Therefore,

IT IS HEREBY ORDERED, ADJUDGED AND DECREED THAT:

1. The Motion is GRANTED.

2. The Leases set forth on Exhibit 1 attached hereto are hereby rejected pursuant to section 365(a) of the Bankruptcy Code effective as of September 9, 2005 (the “Rejection Date”).

3. On or before the Rejection Date, the Debtors shall relinquish possession of the Leased Aircraft Equipment (and the documents and records relating thereto) to the Lessors at a mutually agreed upon location in the continental United States in accordance with the relevant Section 1110(b) Agreement; provided, however, that, to the extent that possession of the Leased Aircraft Equipment (and documents and records relating

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thereto) is relinquished after the Rejection Date, the Debtors shall pay to the relevant Lessor an amount equal to the average daily Basic Rent (as defined in the operative Lease) payable by the Debtors during the term of the applicable Lease with respect to such Leased Aircraft Equipment for each such day after the Rejection Date to but excluding the date of return.

4. For the Leased Aircraft Equipment the Debtors shall (a) continue the existing insurance coverage for such Leased Aircraft Equipment for twenty (20) days after the Rejection Date and (b) during that twenty (20) day period maintain the Leased Aircraft Equipment pursuant to the short-term requirements of the Debtors’ Federal Aviation Administration-approved maintenance program.

5. Upon written request from the Lessors, the Debtors agree to provide the Lessors with a lease termination document to file with the Federal Aviation Administration in connection with such Leased Aircraft Equipment, if applicable; provided, however,
that the Lessors shall be solely responsible for all costs associated with such lease termination document, including, but not limited to, any costs for preparation, filing and recordation.

6. Any Lessors asserting a claim arising out of or related to the Leases shall file a proof of claim on account of such claim against the Debtors or their estates on or before the Rejection Claim Bar Date.

7. Notwithstanding the relief granted herein and any actions taken hereunder, nothing contained herein shall create, nor is it intended to create, any rights in favor of, or enhance the status of any claim held by any person.

8. This Court retains jurisdiction with respect to all matters arising from or related to the implementation of this Order.

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EXHIBIT 1

Leased Aircraft Equipment

Airframe Airframe Engine Engine Engine Effective
Lessee Manufacturer Serial U.S. Reg. Manufacturer Serial Serial Rejection
Lessor/Address Operator and Model Number No. and Model Number # 1 Number # 2 Location Date

Wilmington Trust, US Boeing 23705 N519AU CFM56-3B-2 720-985 721-963 Airframe: TBD September 9,
acting as owner Airways, 737-300 ESN #1: TBD 2005
trustee for Viacom Inc. ESN #2: TBD
Inc. (owner
participant)
Wilmington Trust To be delivered to
Company a mutually agreed-to
Rodney Square location in the
North, 1100 N. continental United
Market Street State
Wilmington, DE
19890-1605

Wilmington Trust, US Boeing 23706 N520AU CFM56-3B-2 722-111 721-996 Airframe: TBD September 9,
acting as owner Airways, 737-300 ESN #1: TBD 2005
trustee for Viacom Inc. ESN #2: TBD
Inc. (owner
participant)
Wilmington Trust To be delivered to
Company a mutually agreed-to
Rodney Square location in the
North, 1100 N. continental United
Market Street States
Wilmington, DE
19890-1605

Wilmington Trust, US Boeing 23856 N521AU CFM56-3B-2 721-997 721-998 Airframe: TBD September 9,
acting as owner Airways, 737-300 ESN #1: TBD 2005
trustee for Viacom Inc. ESN #2: TBD
Inc. (owner
participant)
Wilmington Trust To be delivered to
Company a mutually agreed-to
Rodney Square location in the
North, 1100 N. continental United
Market Street States
Wilmington, DE
19890-1605

[2] Unless otherwise defined herein, all capitalized terms shall have the meaning ascribed to them in the Motion.

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