A federal bankruptcy court on Monday approved plans by Air Wisconsin to invest USD$125 million in US Airways Group, US Airways said on Monday.

The stake by Air Wisconsin's financing arm is structured as a debtor-in-possession (DIP) loan. It represents half of what US Airways is seeking in cash to exit bankruptcy by June 30.

Air Wisconsin is the nation's largest privately held regional airline. US Airways, the seventh-largest domestic airline, has been operating under Chapter 11 bankruptcy protection since September 2004.

The federal bankruptcy court in Alexandria, Virginia, approved the agreement with Air Wisconsin's Eastshore Aviation that permits US Airways to draw USD$75 million immediately, and equal installments of USD$25 million at a later time.

If US Airways emerges from bankruptcy, the entire USD$125 million in financing will convert to equity.

As part of the arrangement, Air Wisconsin can provide regional jet service as a US Airways Express carrier.

Air Wisconsin currently flies for United Airlines. The US Airways deal does not affect Air Wisconsin's operations for United.