"US Airways Bankruptcy 1 Month Away -WSJ"

Friday, August 13, 2004

US Airways Bankruptcy 1 Month Away -WSJ
Reuters


NEW YORK (Reuters) - Investment bankers working for US Airways Group
Inc.'s pilots union said the No. 7 U.S. airline could seek bankruptcy
protection by mid-September if it does not get needed cost cuts, the
Wall Street Journal reported on Friday. 

Bill Pollock, chairman of the Air Line Pilots Association union's group
at the Arlington, Virginia-based carrier, said in a letter that the
union's leadership "does not disagree in principal with the conclusions"
reached by the union's banker, Glanzer & Co., the newspaper said. 
 
"The reality of our financial situation speaks for itself," the letter
said. 

The airline did not immediately return a call seeking comment. 

The 26-page report, dated July 14 and released this week to 3,400 ALPA
members, according to the newspaper, essentially confirms US Airways'
own wary outlook for its future. 

The report said the carrier's creditors have already put claims on its
cash to minimize losses if US Airways collapses, the newspaper said, and
that US Airways "might be worth more dead than alive to groups other
than the employees" because other airlines might use its assets more
profitably. 

Last month, US Airways Chief Executive Bruce Lakefield told employees
that if the carrier fails to cut costs, it "could just run out of steam
sometime next year." 

US Airways lowered its cost structure during its eight months in
bankruptcy protection in 2002 and 2003. But soaring fuel prices and
growing market share among discount carriers have made it difficult for
the carrier to succeed. 

As part of its drive to cut costs by $1.5 billion, US Airways has said
it needs about $800 million of labor concessions. 

This includes $295 million from pilots, $263 million from mechanics and
fleet service workers, $122 million from reservation agents and
passenger service and ticket counter employees and $116 million from
flight attendants. 

Pilots have offered to take pay cuts of 12.5 percent and work more hours
through 2008. Flight attendants have said they would discuss
concessions. 

The carrier recently said it would discontinue Pittsburgh as a flight
hub. On Thursday it said it would halt nonstop service from that city on
20 routes, but maintain such service to more than 50 markets. 

US Airways shares fell 9 cents to $2.54 on Thursday. They began the year
at $6.22. 


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