ARLINGTON, Va., July 10, 2002—US Airways President and Chief Executive Officer David Siegel said that the conditional approval today of a $900 million federal loan guarantee of a $1 billion loan by the Air Transportation Stabilization Board (ATSB) is recognition of the carrier`s “relentless, focused and comprehensive efforts to restructure our airline by cleaning up our balance sheet and implementing a successful business plan.”
“Obtaining the conditional approval of this $1 billion loan is one of the cornerstones of our restructuring plan and when closed, upon our satisfying the ATSB`s terms and conditions, should provide us with the necessary liquidity and cash resources as we restructure our airline,” said Siegel. “We are moving to implement domestic and international codeshare agreements and to vastly expand our regional jet fleet, which along with some other scheduling and marketing initiatives, will improve our ability to generate more revenue. Those efforts, coupled with significant labor cost reductions and more affordable aircraft lease and supplier costs, are part of our comprehensive turnaround strategy.”
The ATSB loan guarantee program was enacted by Congress last September to provide financial stability to airlines impacted by 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.
Siegel said that the airline must now quickly and successfully conclude negotiations with labor unions and lessors, lenders and suppliers that satisfy the ATSB loan guarantee conditions in order to implement a voluntary restructuring plan that does not involve a Chapter 11 filing. The airline has implemented a strategic payment deferral program on aircraft that have either been grounded or might be eliminated from the fleet as part of a restructuring, and negotiations with those various financial parties continue. In addition, tentative agreements with several of the unions representing US Airways work groups have been reached, but agreements with all unions must be completed and ratified by the memberships.
“Much has been accomplished in a very short period of time as we have worked to meet the very rigorous standards established by the ATSB, but now we must focus on completing the process quickly,” said Siegel. “The support of elected officials, our corporate partners, airport officials and local community leaders has been a very big part of this process, and we are very appreciative of the literally thousands of individuals who have expressed their support for our loan guarantee application and our overall restructuring efforts. We are too important to the hundreds of communities that we serve to not successfully achieve this turnaround and our focus will remain on achieving a successful restructuring.”
Reporters needing additional information should contact US Airways Corporate Communications at (703) 872-5100.