US Airways Applies for Federal Loan Guarantee
US Airways Group, the airline perhaps most damaged by the Sept. 11 attacks, said Monday that it applied for a $900-million federal loan guarantee as part of its plan to keep the nation’s sixth-largest carrier out of bankruptcy.
The petition is by far the largest since the loan guarantee program was established as part of a $15-billion bailout of the airlines after Sept. 11. A few smaller carriers have applied so far, and only one of those, America West Holdings Corp., has received help in the form of a $380-million guarantee. The deadline to apply is June 28.
US Airways, based in Arlington, Va., was especially hard hit by the attacks and the subsequent plunge in air travel because its routes are concentrated in the East. The airline lost nearly $2 billion last year and an additional $269 million in this year’s first quarter.
US Airways said it wants the guarantee to back a $1-billion loan needed for the carrier’s restructuring. The airline also is seeking more than $1.3 billion in annual cost savings from its employees, suppliers and lessors to help win the loan guarantee.
The agency doling out the guarantees, the Air Transportation Stabilization Board, looks more favorably on candidates that have persuaded all those groups to make concessions to help keep the airline flying.
As part of that effort, the Air Line Pilots Assn.--the union for US Airways’ pilots--last week offered to cut its pay by 26%, but US Airways is seeking a reduction of 32%, ALPA said. US Airways declined to comment on specifics of the negotiations. US Airways’ labor costs are among the highest in the business, and the airline says cutting those expenses is crucial to its survival.
Built by the merger of several airlines in the 1980s, US Airways and its regional jet units fly to 200 cities in 38 states and several foreign countries. US Airways’ stock closed Monday at $3.10 a share, down 4 cents, on the New York Stock Exchange.
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Bloomberg News was used in compiling this report.
