May 2, 2005
For the fourth time, US Airways has missed the deadline for filing its bankruptcy reorganization plan. Last month, US Air missed its April 15 deadline but said it would have a plan ready by April 30. Now, the company says it is still in discussions with its leading creditor, General Electric Co.
Last year, US Airways and GE signed an agreement that gave the airline access to $140 million and up to 31 jets over the next three years. The agreement requires US Air to exit bankruptcy by June 30. The reorganization plan is an essential part of that process.
The troubled Virginia-based airline's first-quarter loss grew by nearly 8 percent from the same time a year ago, as higher fuel prices and stiff competition from low-fare carriers combined to stifle revenue and drive up expenses. The company post a loss of $191 million, compared to $177 million a year ago.
The loss would have been even greater had US Airways not shed $89 million of its liabilities through the bankruptcy proceeding. Without that adjustment, the loss would have been $280 million.
Besides trying to find its way out of bankruptcy, US Airways is trying to engineer a merger with America West, a deal that would require the approval of the bankruptcy court and its creditors, not to mention America West's shareholders, both airlines' unions and the Justice Department.
US Airways has been looking for $350 million to finance its reorganization and at last word, was still $100 million short, after securing commitments for $250 from Republic Airways Holidays and an investment group led by Air Wirsconsin.
In the Phoenix area, America West's unions are growing increasingly restless as they ponder the likely effect of a merger with US Airways. Since US Air is a larger, older airline that has already been through several mergers, its employees tend to have more seniority, which could mean that a higher proportion of America West employees would be laid off following a merger.
