America West Gets Financing of $55 Million

PHOENIX —  America West Airlines made a deal Sunday with a competitor and one of its biggest creditors for $55 million in loans intended to help the carrier work its way out of bankruptcy court.

Northwest Airlines would put up $20 million in loans and also would get an option to buy rights to America West’s only overseas route--from Honolulu to Nagoya, Japan--for $15 million in two years.

Northwest also agreed to a joint marketing program to integrate its strong overseas network with America West’s route system, which concentrates on the Southwest. The deal would link the carriers’ booking and ticketing operations and their frequent flier clubs.

The remaining $35 million in debtor-in-possession financing would come from the parent of Guinness Peat Aviation, the Irish company that owns much of America West’s leased fleet.

America West filed June 27 for Chapter 11 protection, the fourth U.S. airline to do so since December.

The deal announced Sunday needs court approval. Providers of debtor-in-possession financing approved by a bankruptcy court get paid before other creditors.

The Tempe, Ariz.-based carrier--the only one founded since deregulation stood the industry on its head in the 1970s--has lost $80.8 million in 1991. Attempting to cut its losses, it has pared its route system, laid off workers and returned plane to lessors.