By MICHELINE MAYNARD

Published: March 15, 2005

US Airways said last night that Republic Airways Holding had agreed to invest $125 million in the airline once it emerges from bankruptcy protection.

It was the second such investment obtained in the past month by US Airways, and greatly increases its chances of surviving.

In addition, US Airways said it could sell some of its slots at LaGuardia Airport to Republic, the parent company of Chautauqua Airlines and Republic Airlines. Both those airlines fly as US Airways Express, the company’s regional carrier.

When US Airways sought bankruptcy protection on Sept. 12, for the second time in two years, a number of industry analysts predicted the airline could be forced to liquidate.

But last month, US Airways, the nation’s seventh-largest carrier, arranged a $125 million investment by Air Wisconsin, which is also a regional carrier.

In a statement yesterday, US Airways said the Republic deal was on its ability to raise $350 million in exit financing, including the money Republic is investment. That leaves the airline with about $100 million to raise.

The deal with Republic requires the approval of the United States Bankruptcy Court in Alexandria, Virginia, near US Airways’ headquarters in Arlington. The airline was supposed to submit a reorganization plan on Tuesday, but said its lenders agreed to a one-month delay.

It aims to emerge from bankruptcy on June 30, a date set by GE Capital Aviation Services, its major aircraft lender.

In return for the investment, US Airways gave Republic the right to approve its business plan. And it said Republic could provide another $110 million to use while it reorganizes.

Under that potential arrangement, US Airways said it could sell Republic 24 slots used by its commuter operations at LaGuardia, and 113 such slots at Reagan National Airport in Washington D.C. Slots allow an airport to operate routes from that airport.

If that happens, US Airways said it had the right to lease back the use of the slots, and repurchase them two years from now. US Airways tried to sell those slots, along with other assets, in early 2004 in an effort to raise cash. But it failed to reach a deal.

US Airways also said it could sell or assign the leases for up to 28 regional jets to Republic, which would continue to operate them under the US Airways Express name.

While under bankruptcy protection, US Airways has been operating on the cash it pledged as collateral for a package of loan guarantees granted by the federal Air Transportation Stabilization Board when it emerged from its first bankruptcy in 2003. US Airways owes $717 million on its loan package.

After it filed for Chapter 11 protection in September, US Airways obtained $1 billion in wage and benefit cuts from its unions. It was the third set of concessions granted by its workers since its first bankruptcy.