ARLINGTON, Va., June 10 — US Airways filed an application today with the federal government seeking a $900 million loan guarantee for a $1 billion loan that it intends to use to revamp the company.þþThe filing came as a surprise because David N. Siegel, the chief executive, had said he wanted to reach an agreement with the airline's unions on deep concessions before making the filing. The carrier, the nation's sixth largest, and its unions have been in talks since last month, when executives asked labor leaders for cuts to save $950 million a year.þþThe government has said it will approve only applications with business plans that demonstrate that the airline can reach profitability and repay the loan, which generally translates into widespread cost-cutting by the carrier.þþThe airline's largest unions said the filing would not change the continuing negotiations.þþUS Airways, based in Arlington, is the seventh and by far the largest airline to apply for a federal loan guarantee since Congress approved a $15 million bailout package for the industry after the Sept. 11 attacks. Congress set up the Air Transportation Stabilization Board to administer a $10 billion loan guarantee program and cash payouts totaling $5 billion that were immediately given to the airlines. The board has rejected two applications and approved one, giving $380 million in backing last December to America West.þþÿOur intent is to restructure US Airways and make it a profitable and successful airline that will be a competitive force, especially on the East Coast,ÿ Mr. Siegel said yesterday in a written statement. ÿThis loan guarantee is not an entitlement, and we know we must demonstrate our ability to repay the loan, keep our costs in check, and have a viable business plan.ÿþþBetsy Holahan, a spokeswoman for the stabilization board, said the three-member board had no timeline for making a decision on the application. Last year, the Justice Department blocked United Airlines' proposed buyout of US Airways; now the federal government might come to the aid of US Airways.þþThe business plan filed with the application calls for $1.3 billion in annual cuts, with $950 million coming from personnel costs and $350 million from suppliers, said David Castelveter, a company spokesman.þþUS Airways reported a $269 million loss last quarter, its seventh consecutive losing quarter, and a $2 billion loss last year. It was harder hit than many of its competitors by the Sept. 11 attacks because its routes are concentrated on the East Coast, where many business travelers have turned to cheaper methods of transportation. It also has the most departures from Ronald Reagan Washington National Airport, which was closed for several weeks after the attacks.þþWhen asked why the airline decided to file the application before obtaining the concessions it wants, a US Airways official said that the ÿfinancial house was in order.ÿþþÿBy filing the formal application now, it does not preclude us from making revisions to it,ÿ said the official, who spoke on the condition of anonymity. He added that the airline could revise its application until June 28, the government deadline for any carrier that wants to file for a loan guarantee. After that, he said, the filing can still be altered if the stabilization board requests changes.þþWhether the application succeeds will depend largely on the amount of concessions the airline is able to negotiate with its six unions. None of the large unions have agreed to the numbers put forward by management, although all are in talks. Mr. Siegel had said he wants to reach agreements on concessions by June 15, and several unions said they were working to meet that deadline.þþÿRight now, we are supporting US Airways's efforts to get the A.T.S.B. loan guarantee,ÿ said Roy Freundlich, a spokesman for the Air Line Pilots Association, which represents 4,800 active workers. ÿFiling the application today is one step in that process. The timing of it is mostly a minor point. We basically have negotiations on the issues on hand, not on the management's timing of the application filing.ÿþþMr. Freundlich said the pilots were willing to allow $400 million in cuts from wages and benefits, although the carrier has said it wants $595 million, the most of any employee group. The carrier announced yesterday that the pilots had agreed to allow PSA Airlines, a subsidiary of US Airways, to fly regional jets, which are much cheaper to operate than larger mainline aircraft. The union agreed earlier to allow US Airways to double its number of regional jets, to 140.þþDuring the current negotiations, the pilots have said they will allow US Airways to increase its regional jet fleet to more than 300 as part of the concessions.þþThe International Association of Machinists, which represents 12,000 active workers, said that it had offered an alternative to the $261 million in cuts that US Airways wants from it, and that the carrier made a counterproposal late Friday.þþÿWe knew that they intended to file the loan application,ÿ said Joe Tiberi, a spokesman for the machinists. ÿWhether they filed it today, or a week from now, or two weeks from now, it really doesn't change the negotiations. They're still seeking the same amount of money from the employees that they were. We knew our negotiations would be one piece of their restructuring plan, and the filing with the government would be another.ÿþþJeff Zack, a spokesman for the Association of Flight Attendants, said that executives ÿhave been talking to the A.T.S.B., so the company knows what they need to do as far as the A.T.S.B. is concerned.ÿþþAnalysts said that the amount of backing the airline is seeking seems about right, given the revamping plans. Mr. Siegel has said he wants to strengthen the carrier's three hubs, fly more regional jets and find a code-share partner.þþÿThey wanted to get that filing out there,ÿ said Michael J. Linenberg, an analyst at Merrill Lynch. ÿThis was their way of saying, `Hey, we need to get this done, but we still need to get some things finalized.' We all know that for these guys to make as strong an application as they can, they need cooperation from their labor groups.ÿþþ
Source: NY Times
