US Airways wants a bankruptcy judge to impose temporary wage and other cost cuts on its union workers, warning that it only has enough cash to operate until January.þþThe airline said in a filing late on Friday night with the federal Bankruptcy Court for the Eastern District of Virginia that the forced contract modifications would be worth about USD$38 million a month. Combined with other savings, US Airways hopes to realize an extra USD$200 million in cash.þþThat gain would likely enable US Airways to keep flying until March, if revenues during the typically slower winter travel season did not slip below projections and fuel prices did not rise further, the company said.þþWithout new cash over the next few months, US Airways warned it would probably have to severely downsize and possibly be forced to liquidate in February.þþThe company expects to lose USD$600 million this year. Lost revenue from Hurricanes Frances and Ivan, which hit Florida and the US Gulf Coast in recent weeks, alone totaled USD$20 million.þþÿWaiting for a cash crunch to be right in front of us is simply too late, and if we were forced to implement interim relief at a later date, the pay cuts would be deeper and even more painful,ÿ said US Airways Chief Executive Bruce Lakefield.þþÿThe debtors must immediately begin to transform or they will almost certainly fail,ÿ the company said separately in court papers that detailed a proposal for pay cuts of 23 percent, sharply reduced pension benefits and work-rule changes.þþThe airline also wants to get out from under a labor contract requirement that it keep 279 planes in its active fleet and have flexibility to outsource some expensive maintenance.þþBANKRUPTCY BURDENþþUS Airways entered bankruptcy for the second time in two years on September 12, severely pressured by low-cost competitors, soaring fuel costs and an inability to borrow or attract new investors.þþAlso weighing heavily on the company's finances are an estimated USD$260 million in aircraft lease payments that are due in early 2005, and requirements that it maintain a certain cash balance to meet the terms of a government loan guarantee granted last year.þþThe carrier is trying to cut its way to health and operate more like its low-cost rivals. It is in talks with its labor groups on reaching consensus on the need for immediate cuts as well as longer-term relief. But no agreements appear close.þþUS Airways had for months unsuccessfully sought USD$800 million in long-term concessions from pilots, flight attendants, mechanics, gate and reservations agents, baggage handlers and other workers. Sources with knowledge of the company's plans say the overall figure will now go higher.þþÿThis would give them some breathing room,ÿ said Jack Stephan, a spokesman for the Air Line Pilots Association. ÿWe're still committed to a long-term agreement.ÿþþThe court will schedule a hearing on the new request.þþ
Source: AirWise.com
