ARLINGTON, Va., August 11, 2002—US Airways said today that its first full day in operation since filing Chapter 11 was nearly flawless. As of 5 p.m., Monday, Eastern time, the company reported that it had completed 97 percent of its flights on time, and a 12-percent increase in normal Monday call volume, with no customer calls placed on hold.
“We are pleased to report that our operations throughout the U.S. and internationally ran smoothly yesterday and today, without interruption, and our passengers are seeing no difference in the quality of our service,” said President and Chief Executive Officer David Siegel.
“Today`s seamless performance is due in the greatest degree to the hard work and dedication of our employees and the support of our vendors,” Siegel said.
Meanwhile, the U.S. Bankruptcy Court today took important steps to ensure that normal operations continue, giving its approval to, among other things, pay pre-petition and post-petition employee wages, salaries, workers compensation, health benefits and other employee obligations during its voluntary Chapter 11 case. At today`s hearing on first-day motions, the Court also approved the Company`s request to honor all existing customer programs, including its Dividend Miles Program.
On Sunday evening, the Court had entered a series of eight essential “bridge” orders granting relief with respect to US Airways` employees, customers, fuel suppliers, interline agreements with other airlines, critical trade vendors, foreign vendors and governments and cash management systems. The Court granted further relief on these and other first-day motions at a hearing before the Honorable Robert G. Mayer in Alexandria, Va.
The Court today also approved interim use of $75 million of debtor-in-possession (DIP) financing to continue operations, pay employees, and purchase goods and services going forward. In conjunction with the filing, US Airways received commitments for $500 million in DIP financing from a group of financial institutions led by Credit Suisse First Boston and Bank of America Corp. to fund operations during the restructuring. The final hearing on the DIP agreement has been set for Sept. 26, 2002.
Also on Sept. 26, the Court will consider the proposal under which Texas Pacific Group will make a $200 million investment in the equity of the airline upon its emergence from Chapter 11. This investment, which remains subject to continuing diligence and final documentation, competing and/or higher offers, and court approval, would result in Texas Pacific Group owning about 38 percent of the airline, post-emergence.
Siegel said he was extremely pleased by the first-day orders entered by the Court, as well as the support received at the first-day hearing by the Company`s employee labor unions. “While we restructure, our operations continue, and we will continue to purchase and pay for goods and services from our suppliers,” he said, noting that US Airways has already contacted a number of its major vendors, who have indicated their support of the Company`s restructuring initiatives.
“With our first-day motions approved, we can now direct our focus on securing the cost-savings from aircraft lessors and financiers necessary to complete our restructuring initiatives, and concentrate on our key constituencies—our customers, our employees and our vendors. We will continue our restructuring initiatives aimed at restoring US Airways to profitability with a capital structure able to support today`s air travel environment,” Siegel said.
The Company filed its Chapter 11 petitions on Aug. 11, 2002, in the U.S. Bankruptcy Court for the Eastern District of Virginia in Alexandria.
US Airways continues its exceptional service record, consistently placing near the top in the DOT`s monthly statistics for on-time performance, baggage delivery, and customer service throughout 2002. In 2001, US Airways finished first in three of the four DOT quality measurements and was ranked as the top network carrier by the Airline Quality Rating index. The largest air carrier east of the Mississippi where more than 60 percent of the U.S. population resides, US Airways operates the seventh largest airline in the United States and the fourteenth largest airline in the world with approximately 40,000 full-time and part-time employees. US Airways carried approximately 56 million passengers last year with regularly scheduled service to approximately 200 destinations in 38 states across the United States and in Canada, Mexico, the Caribbean and Europe. Operating revenues for the year ended December 31, 2001 were approximately $8.3 billion.