Plan for Revamping America West Earns Wings in Bankruptcy Court

PHOENIX — A federal bankruptcy judge approved the reorganization plan of America West Airlines Inc. on Wednesday, clearing the way for the carrier to leave Chapter 11 protection later this month.

The decision eliminates almost $400 million in debt and ends three years of bankruptcy proceedings for the Phoenix-based airline.

The reorganization gives control of America West to a group led by David Bonderman, a Texas financier who brought Continental Airlines Inc. out of bankruptcy in April, 1993.

Under the plan approved by Judge Robert G. Mooreman, Bonderman’s group--which includes Continental, Mesa Airlines Inc. and the money management firm Fidelity Investments--will provide America West with up to $245 million in exchange for 33.5% of the company’s new common stock and control of nine of its 15 board seats.

Of the remaining stock, 59.5% will go to America West’s unsecured creditors, 5% will go to current shareholders and 2% will go to GPA Group, which leases aircraft to America West.

America West Chairman William Franke, speaking to reporters outside the courthouse, predicted the company will emerge from bankruptcy protection Aug. 23 with about $300 million in available cash.

Mooreman’s confirmation came after virtually all creditor opposition to the plan had been resolved earlier in the day. Creditors representing 95.2% of the unsecured claims and 91.3% of the common shareholders supported the reorganization proposal, the airline said.