thezipper
Aug 11, 02, 5:07 pm
US Airways, hard hit by the drop off in travel after the Sept. 11 terrorist attacks, filed for Chapter 11 bankruptcy protection Sunday, the company said.
The airline, which has mentioned bankruptcy as possibility after it lost $2.1 billion during 2001, said all of its flights are expected to continue without interruption. The Arlington, Va.-based airline said it received $500 million in financing to keep operating while it reorganizes.
Article in the Washington Post (http://www.washingtonpost.com/wp-dyn/articles/A5917-2002Aug11.html)
Shareholder
Aug 11, 02, 8:58 pm
Yes, just heard this a 9pm EST radio newscast. No need for panic though. It's not the same as Vanguard's version.
I already received the following e-mail from U.S. Airways:
Dear RICHG,
Because of your loyalty to US Airways, I want to make you aware of an important step our company has taken. US Airways Group and certain of its subsidiaries today filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code to complete our restructuring initiatives and obtain cost-savings from some of our aircraft lessors and financiers and other key stakeholders as a means of ensuring the company's return to profitability. We anticipate that our court-supervised restructuring will be accomplished on a "fast-track" and have targeted emergence from Chapter 11 in the first quarter of 2003.
It is important for you to understand that US Airways is not going out of business. The Chapter 11 process will allow US Airways to complete its restructuring initiatives while we continue day-to-day operations. Every ticket will be accepted and honored in accordance with current US Airways policies, refunds and exchanges will be made as usual. Interline and reciprocal agreements with other carriers, including affiliates and code share partners, will remain fully intact and continue without interruption.
Our Dividend Miles program will continue to offer you significant award benefits. This means that we will continue to honor miles previously earned in the Dividend Miles program and you will continue to accrue miles for travel during the reorganization and beyond. Dividend Miles members should expect the same high quality service and safety standards they have come to rely on from US Airways. Be assured that US Airways plans to be here to serve you for many years to come.
The US Airways Clubs network will continue to operate without interruption for its members.
US Airways has secured $500 million in new financing from a group of institutions led by Credit Suisse First Boston and Bank of America Corp. US Airways is also pleased to announce that Texas Pacific Group joins the company as equity investor. Participation of these top-tier institutions is a strong endorsement of US Airways and the steps our company is taking to build a better airline for you. We are committed to enhancing our services to you with more regional jets and marketing alliances such as our recently announced agreement with United Airlines.
Since early 2002, US Airways has put in place a three-part restructuring plan that involved improving liquidity, increasing revenues, and reducing costs, to allow the company to take advantage of its competitive strengths and return to profitability. US Airways' restructuring plan is predicated upon achieving binding commitments for cost-savings from employees, aircraft lessors and financiers and other parties. The majority of our employee groups and their union leaders overwhelmingly supported our business plan objectives in the form of wage reductions, revisions to benefits and some work rule changes. While US Airways was able to successfully negotiate cost-savings from most of its employee groups, we determined that we were unlikely to conclude consensual negotiations with certain vendors, aircraft lessors and financiers in a timeframe necessary to complete an out-of-court restructuring.
While we are disappointed at the outcome of our efforts to obtain the support of our business plan by some of our lessors and other key stakeholders - particularly in the face of the sacrifices our employees have agreed to make - we will now focus our energies on utilizing the Chapter 11 process to achieve these cost-savings and return US Airways to a profitable and highly competitive position, dedicated to safe, convenient and reliable air service.
We believe that a financially sound and competitive US Airways benefits all of our constituents - our passengers, our suppliers, our employees and the communities we serve. US Airways has long been an integral member of the cities and towns in which we live and work - as an employer, a customer and a service provider. Our ability to complete a successful reorganization is important to many people and we intend to remain a viable contributor for many years to come. We look forward to continuing our relationship as we work to make a newly reorganized US Airways a reality.
We will update our website (http://www.usairways.com) regularly and provide you with more detailed updates as appropriate. Thank you for your continued support.
Sincerely,
David Siegel
President and Chief Executive Officer