Posted on: Monday, August 12, 2002

US Airways files for bankruptcy

By Jim Hopkins
USA Today

US Airways, hard hit when travel plummeted after Sept. 11, filed for bankruptcy court protection yesterday after failing to win critical concessions from employees and suppliers.

The country's seventh-largest carrier said its 3,800 daily flights and other operations would not be affected.

The airline said it had received $500 million in new financing to continue operating from a consortium including Credit Suisse First Boston, Bank of America and buyout firm Texas Pacific Group.

US Airways had hoped to avoid the courts by wringing $1.3 billion in savings, including about $950 million from 35,000 employees.

Just last week, the airline reached agreements with unions representing pilots and flight attendants on cuts totaling $541 million. It also won preliminary approval for $900 million in federal loan guarantees on a $1 billion loan if it could meet certain conditions. The government said yesterday its aid remains available.

But US Airways failed to reach agreements with the International Association of Machinists, which represents mechanics and other workers. And it could not win concessions from other creditors fast enough.

US Airways said it was optimistic it could emerge from reorganization by early 2003, but it is likely to be a smaller company. A spokesman said the airline is poised to cancel leases on at least 40 of its 315 jets.