updated 2/18/2005 7:40:52 PM ET 2005-02-19T00:40:52

An investor group that is a subsidiary of Air Wisconsin Airlines Corp. will loan US Airways $125 million in funding for the bankrupt airline’s restructuring plan, US Airways announced Friday.

The struggling airline said in a news release that Eastshore Aviation LLC’s financing will convert to equity after US Airways emerges from bankruptcy. As part of the agreement, US Airways and Air Wisconsin will enter into an air services agreement under which Air Wisconsin may provide regional jet service under the US Airways Express brand.

Terms of the agreement will be subject to the approval of the U.S. Bankruptcy Court for the eastern district of Virginia, where the US Airways case is being heard.

Air Wisconsin, based in Appleton, Wis., is the nation’s largest privately held regional airline. In 2004, its 87 all-jet fleet generated approximately $700 million in revenue and flew more than 7 million passengers under the United Express brand.

US Airways Group Inc., the nation’s seventh-largest airline, filed for Chapter 11 bankruptcy protection in September for the second time in two years.

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