ARLINGTON, Va., June 10, 2002— US Airways today filed its application with the Air Transportation Stabilization Board (ATSB) for a $900 million federal government guarantee of a $1 billion loan that the airline will use in a corporate restructuring as it seeks to recover from the continuing financial impact of the September 11 terrorist attacks.
In the reporting periods since the September 11 attacks, the nation’s seventh-largest airline has incurred net losses totaling $1.425 billion, much of it directly related to the post-September 11 drop in air travel, higher security costs, the prolonged closure of Washington’s Ronald Reagan National Airport, and the disproportionate impact of the attacks on the airline’s East Coast route network.
President and Chief Executive Officer Dave Siegel, who took over management of the airline in March 2002, has spent the last three months putting together a restructuring plan to return the airline to profitability, with the federal loan guarantee and cost reductions as the cornerstones of the restructuring to ensure sufficient cash resources and adequate liquidity.
“No airline has felt the impact of the steep drop in consumer demand for travel more than US Airways,” said Siegel. “While our position at Reagan National Airport and our strong route network in the East have always been assets, over the past nine months, those strengths have worked against us as travelers take the train, drive, find cheap fares designed to spur travel, or just stay home.”
Siegel said that the airline is in active negotiations with its labor unions, vendors, lessors and other stakeholders to implement more than $1.3 billion in annual cost reductions that will improve its competitive position.
“Our 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,” said Siegel. “This 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. We will spend the coming days working with the ATSB staff to address their questions, respond to their concerns, and finalize our application so that we have a strong and compelling case for the loan guarantee.”
Reporters needing additional information should contact US Airways Corporate Communications at (703) 872-5100.