US Airways files for bankruptcy protection

WASHINGTON – For the second time in two years, US Airways announced on Sunday it had filed for bankruptcy protection after its key unions rejected wage and benefit cuts amid skyrocketing fuel prices and cut-throat competition.

The filing with a US Bankruptcy Court in Alexandria, Virginia, just across the Potomac River from the US capital, signalled multiplying problems for the US airline industry, which is still struggling with the legacy of the September 11 2001 attacks. At the same time, economist say, mainstay US carriers like US Airways, Delta, United and American Airlines are facing fierce competition from discount companies like Southwest and JetBlue, which are claiming an ever growing share of the market.The seventh-largest US airline, which had been trying for weeks to wring concessions from its labour unions to avoid bankruptcy, listed in its petition assets totalling approximately US$8,8 billion (N$58,08 billion) and liabilities reaching nearly US$8,7 billion.But US Airways chief executive Bruce Lakefield acknowledged he had so far failed to convince the unions to agree to the pay and benefit cuts that would enable the company to meet all of its future obligations.”Since we still lack the new labour agreements that are needed for the transformation plan to succeed, we must preserve the company’s cash resources that are required to implement the plan,” Lakefield said in a statement.US Airways just emerged from Chapter 11 reorganisation in March 2003, after promising to implement drastic cost-cutting measures to stay afloat.Lakefield said the carrier had managed to cut expenses by almost two billion dollars during its restructuring process, but was eventually undercut by competition from low-cost airlines, and unabated fuel price increases since the 2003 invasion in Iraq, political trouble in Venezuela and legal trouble for a leading oil producer in Russia.US Airways projects its 2004 fuel costs to be approximately US$300 million higher than previously expected.To get out of the red, the carrier is seeking US$800 million in pay cuts from its five unions.But in-fighting between pilot union leaders at US Airways broke out last week, throwing a wrench into the negotiating process.Moreover, flight attendants earlier Sunday rejected the company’s latest offer, calling it an attempt to force employees to shoulder the full burden of US Airways’ recovery.”We are not only disappointed with the company’s latest proposal; we are disgusted,” said Perry Hayes, president of the Association of Flight Attendants.Lakefield, for his part, warned that there was no way of maintaining the company’s viability without substantive cost cutting.”The alternative is to have these jobs exported to a new generation of low-cost airlines, where any employees hired would start at entry-level wages and without seniority,” he said.The deadlock prompted Standard and Poor’s last week to downgrade the airline’s corporate credit rating for the fourth time this year.In its filing, the airline said customers should notice no changes to flight operations or customer service programs because of the filing.It said it intended to ask the bankruptcy court to allow it to continue its key incentives and financial programs.US Airways is one of several full-service US airlines struggling in the post-Iraq-war market, that this year has also been affected by hurricanes in Florida.Last week, Delta Air Lines announced a plan to cut between 6 000 and 7 000 jobs and is reported to be considering bankruptcy.-Nampa-AFPAt the same time, economist say, mainstay US carriers like US Airways, Delta, United and American Airlines are facing fierce competition from discount companies like Southwest and JetBlue, which are claiming an ever growing share of the market.The seventh-largest US airline, which had been trying for weeks to wring concessions from its labour unions to avoid bankruptcy, listed in its petition assets totalling approximately US$8,8 billion (N$58,08 billion) and liabilities reaching nearly US$8,7 billion.But US Airways chief executive Bruce Lakefield acknowledged he had so far failed to convince the unions to agree to the pay and benefit cuts that would enable the company to meet all of its future obligations.”Since we still lack the new labour agreements that are needed for the transformation plan to succeed, we must preserve the company’s cash resources that are required to implement the plan,” Lakefield said in a statement.US Airways just emerged from Chapter 11 reorganisation in March 2003, after promising to implement drastic cost-cutting measures to stay afloat.Lakefield said the carrier had managed to cut expenses by almost two billion dollars during its restructuring process, but was eventually undercut by competition from low-cost airlines, and unabated fuel price increases since the 2003 invasion in Iraq, political trouble in Venezuela and legal trouble for a leading oil producer in Russia.US Airways projects its 2004 fuel costs to be approximately US$300 million higher than previously expected.To get out of the red, the carrier is seeking US$800 million in pay cuts from its five unions.But in-fighting between pilot union leaders at US Airways broke out last week, throwing a wrench into the negotiating process.Moreover, flight attendants earlier Sunday rejected the company’s latest offer, calling it an attempt to force employees to shoulder the full burden of US Airways’ recovery.”We are not only disappointed with the company’s latest proposal; we are disgusted,” said Perry Hayes, president of the Association of Flight Attendants.Lakefield, for his part, warned that there was no way of maintaining the company’s viability without substantive cost cutting.”The alternative is to have these jobs exported to a new generation of low-cost airlines, where any employees hired would start at entry-level wages and without seniority,” he said.The deadlock prompted Standard and Poor’s last week to downgrade the airline’s corporate credit rating for the fourth time this year.In its filing, the airline said customers should notice no changes to flight operations or customer service programs because of the filing.It said it intended to ask the bankruptcy court to allow it to continue its key incentives and financial programs.US Airways is one of several full-service US airlines struggling in the post-Iraq-war market, that this year has also been affected by hurricanes in Florida.Last week, Delta Air Lines announced a plan to cut between 6 000 and 7 000 jobs and is reported to be considering bankruptcy.-Nampa-AFP