newswatcher
19th Jul 2002, 08:05
From the Washington Post(19/7):
"Citing increased competition from low-cost carriers along the East Coast, the continued decline in business travel and stubbornly high costs, US Airways yesterday reported a second-quarter loss of $248 million -- 10 times its loss in the second quarter of last year. The Arlington-based airline has not reported a profit since the second quarter of 2000.
US Airways has said for several months that it might have to file for Chapter 11 bankruptcy protection if it cannot restructure on its own. Last week, the federal government conditionally agreed to guarantee $900 million in loans to US Airways if the carrier gets more than $1.2 billion in wage and debt concessions from its employees, aircraft leasing companies and suppliers. The airline also must agree to give the government an unspecified equity stake and to put up its gates at several key airports as collateral.
US Airways announced its results after the markets closed yesterday. The loss, which came to $3.64 per share, came on revenue of $1.9 billion, down nearly 24 percent from the same period a year ago. The second quarter usually is one of the airline industry's most profitable periods.
US Airways' news was not all bad. The airline managed to reduce its cash losses to $1 million a day, compared to the $3.5 million a day it was losing in the first quarter. The airline also finished the second quarter with $602 million in cash, up from $561 million at the end of March. That increase was partly because of increased bookings by vacationers, who tend to buy advance-purchase, nonrefundable tickets.
US Airways, the nation's seventh-largest airline, had the second-worst results among the six major carriers that had reported through yesterday. American, the world's largest airline, reported the biggest loss, $495 million. But United Airlines -- which is to report today -- has warned investors to expect bigger losses.
To meet the conditions of the federal loan guarantee, US Airways executives are trying to secure major wage concessions from their employees. Pilots, flight attendants and dispatchers have agreed to concessions, but not machinists and ramp workers. Talks with those groups were called off until Monday.
Also yesterday, US Airways announced an agreement for bankrupt Midway Airlines to operate as a regional US Airways Express affiliate.
That will enable US Airways to immediately secure Morrisville, N.C.-based Midway's five regional jets. Under the eight-year agreement, US Airways eventually will take control of 18 regional jets from Midway. Part of US Airways' restructuring plan is to replace its larger, fuel-guzzling planes with hundreds of smaller, 50- to 70-seat passenger planes, such as the ones flown by Midway.
US Airways needs the regional planes faster than aircraft manufacturers can make them, UBS Warburg airline analyst Samuel C. Buttrick said. "US Airways is going to need to round up regional jets from every imaginable source to fund their fleet," he said. "US Airways will be reaching out to a number of incremental feed providers, such as Midway."
Sources close to the deal said US Airways also wanted Midway's 19 prized takeoff and landing slots at Reagan National Airport and La Guardia Airport in New York.
Midway filed for Chapter 11 bankruptcy protection in August, stopped flying after the Sept. 11 terrorist attacks and resumed some flights in December. It grounded flights Wednesday evening and plans to resume service under US Airways' banner by Aug. 31.
The deal is subject to approval by US Airways' pilot union and to Midway's ability to secure $5 million in capital. Half the pilot jobs at the restructured Midway will be reserved for laid-off US Airways pilots. The other half will be filled by Midway pilots."
"Citing increased competition from low-cost carriers along the East Coast, the continued decline in business travel and stubbornly high costs, US Airways yesterday reported a second-quarter loss of $248 million -- 10 times its loss in the second quarter of last year. The Arlington-based airline has not reported a profit since the second quarter of 2000.
US Airways has said for several months that it might have to file for Chapter 11 bankruptcy protection if it cannot restructure on its own. Last week, the federal government conditionally agreed to guarantee $900 million in loans to US Airways if the carrier gets more than $1.2 billion in wage and debt concessions from its employees, aircraft leasing companies and suppliers. The airline also must agree to give the government an unspecified equity stake and to put up its gates at several key airports as collateral.
US Airways announced its results after the markets closed yesterday. The loss, which came to $3.64 per share, came on revenue of $1.9 billion, down nearly 24 percent from the same period a year ago. The second quarter usually is one of the airline industry's most profitable periods.
US Airways' news was not all bad. The airline managed to reduce its cash losses to $1 million a day, compared to the $3.5 million a day it was losing in the first quarter. The airline also finished the second quarter with $602 million in cash, up from $561 million at the end of March. That increase was partly because of increased bookings by vacationers, who tend to buy advance-purchase, nonrefundable tickets.
US Airways, the nation's seventh-largest airline, had the second-worst results among the six major carriers that had reported through yesterday. American, the world's largest airline, reported the biggest loss, $495 million. But United Airlines -- which is to report today -- has warned investors to expect bigger losses.
To meet the conditions of the federal loan guarantee, US Airways executives are trying to secure major wage concessions from their employees. Pilots, flight attendants and dispatchers have agreed to concessions, but not machinists and ramp workers. Talks with those groups were called off until Monday.
Also yesterday, US Airways announced an agreement for bankrupt Midway Airlines to operate as a regional US Airways Express affiliate.
That will enable US Airways to immediately secure Morrisville, N.C.-based Midway's five regional jets. Under the eight-year agreement, US Airways eventually will take control of 18 regional jets from Midway. Part of US Airways' restructuring plan is to replace its larger, fuel-guzzling planes with hundreds of smaller, 50- to 70-seat passenger planes, such as the ones flown by Midway.
US Airways needs the regional planes faster than aircraft manufacturers can make them, UBS Warburg airline analyst Samuel C. Buttrick said. "US Airways is going to need to round up regional jets from every imaginable source to fund their fleet," he said. "US Airways will be reaching out to a number of incremental feed providers, such as Midway."
Sources close to the deal said US Airways also wanted Midway's 19 prized takeoff and landing slots at Reagan National Airport and La Guardia Airport in New York.
Midway filed for Chapter 11 bankruptcy protection in August, stopped flying after the Sept. 11 terrorist attacks and resumed some flights in December. It grounded flights Wednesday evening and plans to resume service under US Airways' banner by Aug. 31.
The deal is subject to approval by US Airways' pilot union and to Midway's ability to secure $5 million in capital. Half the pilot jobs at the restructured Midway will be reserved for laid-off US Airways pilots. The other half will be filled by Midway pilots."