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US Airways announced last Friday that it may have to file for Chapter 11 bankruptcy protection unless it can slash costs and win financial help from the federal government. The airline is putting together a major restructuring plan but says that without a government bail out it faces severe difficulties. It also needs concessions from its employees if the plan is to succeed. The airline has until the end of next month to apply for a federal loan under an aid program approved by the US government. In a filing to the Securities & Exchange Commission, US Airways President and Chief Executive, David Siegel, stated that if the company does not receive government support, it will have to consider alternative restructuring scenarios in the context of a judicial reorganization. Simply stated, this means reorganization under the protection of the US bankruptcy laws. Another of America's major carriers, United Airlines, has already been forced to seek a government loan and is about to try and negotiate concessions from its labor force to help contain costs. US Airways cut back their flights and suffered a USD$2 billion loss last year. Its troubles have continued in the first quarter of the current year when it reported losses of USD$269 million. The company said it expects to get an additional $56 million this year from the federal government as part of last year's congressional bailout, although it warned that pending Congressional legislation could reduce that amount. To date, the airlines have already received $264 million from the federal government. ©2001 Gateway Travel Management. All Rights Reserved.
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