NEW YORK (CNN/Money) -
US Airways Group won court approval for the Retirement Systems of Alabama, which provides retirement benefits for state employees and teachers, to become the airline's new primary shareholder on its planned emergence from bankruptcy next year.
The nation's No. 7 airline, which filed for bankruptcy court protections last month, announced earlier it accepted a $240 million investment that will give the pension fund a 37.5 percent stake in the airline after bankruptcy. The bankruptcy court approved the agreement Thursday morning.
The agreement replaces an earlier one for $200 million with investment firm Texas Pacific Group for the same equity stake. That agreement had been announced at the time of the bankruptcy filing, but last week the alternative offer from the Retirement Systems of Alabama (RSA) was announced.
As part of the new agreement, RSA offered to restructure $340 million in aircraft financing it holds with the airline, as well as underwrite $500 million in debtor-in-possession (DIP) financing. The DIP financing previously had been underwritten by Credit Suisse First Boston and Bank of America.
The bankruptcy court approved $300 million of the $500 million in DIP financing by RSA. US Air's said the RSA agreements have the support of its unsecured creditors committee.
"Having met with RSA CEO David Bronner, I am confident of his strong interest in our successful restructuring, and even more importantly, of his support for the labor-friendly approach that we are taking," US Air CEO David Siegel said.
The airline has won ratification of new labor agreements with its five major labor unions that are expected to save it $840 million a year. It is awaiting final approval of $900 million of federal loan guarantees. The airline has won conditional approval of those guarantees based on its completion of cost-saving agreements with its unions and suppliers.
Shares of US Airways have not traded on the New York Stock Exchange since its bankruptcy filing.
Reuters contributed to this report
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