RHines81

Just received this via e-mail and thought I would share:

"I wanted to take this opportunity to report to you on US Airways and our plans for making sure the airline continues to provide you the best service possible.

Looking back to last summer, our airline faced a number of difficult, but foreseeable financial challenges. But these difficult challenges quickly grew with the tragic - and unforeseeable - terrorist attacks of September 11. As you know, these attacks have changed our industry dramatically.

One effect has been to alter significantly the mindset of the traveling public. Every traveler knows the attacks have had a substantial impact. And while all airlines are contending with the business fallout from September 11, economically, US Airways has been the hardest hit. The post-September 11 reluctance to fly has been most pronounced on the East Coast, where most of our flights are concentrated. US Airways was most heavily impacted by the prolonged closure of Reagan Washington National Airport. Additionally, we're the only airline that has to compete not only with our airline competitors, but also with cars and trains on many of our short-haul routes. The end result is that the events of September 11 and the ensuing deep-rooted changes to our industry are challenging the short and long-term financial health of US Airways.

We are moving quickly towards both a short-term and long-term solution. Today, we filed a document with the Securities and Exchange Commission describing our various restructuring options, including our intention to apply for financing assistance from the Air Transportation Stabilization Board (ATSB). Clearly, our preferred approach, which we are vigorously pursuing, is to reach an accord with our stakeholders, including our employee groups and vendors, on a restructuring plan and to obtain the federal assistance. As the filing with the SEC indicates, however, if US Airways is unable to do so, alternative restructuring scenarios in the context of a judicial reorganization also must be considered. Simply stated, this means reorganization under the protection of the U.S. bankruptcy laws.

Under existing federal law we will submit a loan application to the ATSB by June 28. If we were going to meet this short timetable everyone in the US Airways family, including management, labor, and our vendors, has to sign off on a new business plan in the coming weeks.

We expect to meet all the criteria to be eligible for the ATSB loan guarantees and to meet the application deadline. As part of this process, we will take steps to restructure this company, but we are committed to preserving our existing routes, and serving our communities.

As this process moves forward, I will continue to keep you abreast of our plans. As a frequent traveler, you are familiar with the challenges facing the airline industry. We at US Airways are taking immediate action to ensure that we can build on our legacy of providing outstanding service and getting you where you want and need to go.


Sincerely,


B. Ben Baldanza
Sr. Vice President, Marketing and Planning"

sgopal2

Doesn't look good.

Keep your fingers crossed.

DLSIZE

<FAT LADY> LA LA LA LA DO DIIII DO LA LA LA </FAT LADY>

[This message has been edited by DLSIZE (edited 05-10-2002).]

RobertS975

The real purpose of a bancruptcy would be to break the unions, ala Frank Lorenzo and Continental Airlines in the 1980s.

Setjet

They would leave a huge gap on the east coast (and in my mileage account!).

DLSIZE

Just cashed in my remaining 2700 USAir miles for mags.

Setjet

I didn't know you can cash them in. Do you get anything good for as little as 2700 miles?

LemonThrower

I'm as skeptical as anyone but the purpose of a bankruptcy would be to eliminate debts. Breaking a union would only be a side benefit. USAir has been losing tons of money since Sept. 11, and I don't think they were doing well before Sept 11.

The upshot is that Congress approved lots of money to save the airlines, and I believe most of it is still available.

thebigfish

I don't think this is the end but just the beginning if a airline does it's homework. I tend to think of a Chapter 11 filing like this:
If a airline keeps doing what it has been doing, it's probably doomed. If it uses Chapter 11 to "redo" itself, taking advantage of the "clean slate", changing how it really runs itself -there's hope. If the leases are too high - here's a chance to redo them. If the labor costs are screwed up, then you readdress it..etc. etc. etc.

The bottom line is that most companies don't do it...and never get out of chapter 11.

Fix the problem, USAir, and success can be yours.

I'm waiting for UA to bite the bullet...

DLSIZE

I got two. Smary Money and I think Conde Nast Traveller.

jack123

.....in the end after the mergers & bankruptcy's, those that remain will have to cut service or raise prices or both.
This is an industry that has not been profitable!

Topster

Given a cost structure similar to Southwest, US makes money bigtime!! Yes, this posturing is all about labor cost. And in a few years (or less) similar moves will be made by AA, UA and NW.

RobertS975

Remember this, everyone... an airline that declares Chapter 11 is suddenly at an advantage over its competitors, all of whom have to pay their bills and debts, and honor their labor contracts, union or otherwise.
Howvever, in the public psyche, it may be ruined.

gleff

bankruptcy no longer automatically gets an airline out of its union contracts.

that was a new innovation when frank lorenzo did it with continental.

congress subsequently banned the practice.

Paulo

That letter certainly sounded like a desparate plea, though. I knew this airline stunk (and admittedly has stunk since their BA partnership bitterly broke down several years ago), but this letter underscores that the financial state is worse than many of us thought.

All I can say is that the ****tle has a sizeable resale value; CO Express (the #7 US airline by market cap) could do well with some of the NE shorthall...and heaven knows the LGA and DCA slots have value. But does anybody doubt that the value of the parts is far more than the value of the whole?

Sorry, but god rest its blessed soul, I won't miss US one bloody bit.