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American Morning
US Airways 'Business as Usual'
Aired August 12, 2002 - 07:01 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
PAULA ZAHN, CNN ANCHOR: "Up Front" this morning, it is a first, as we mentioned, for the airlines since the terror attacks last year. A major carrier has now filed for bankruptcy, citing rising costs and a drop-off in air travel.
US Airways said it lost nearly $2 billion last year. Crippling losses, it says, may continue to mount.
CNN's Tim O'Brien is at Washington's Reagan National Airport, the home airport of US Airways. He has the very latest for us now.
Good morning -- Tim.
TIM O'BRIEN, CNN CORRESPONDENT: Well, good morning, Paula.
It is a sad day for US Airways, but not an unexpected one. They had been predicting they may have to file for Chapter 11 bankruptcy for some time.
As you pointed out, they lost $2 billion last year. They were doing better this year, but still losing money big time. Last month, they reported second quarter losses of $248 million.
The recession played a large part of it, but biggest of all was 9/11, as a company senior vice president explained to reporters last night.
(BEGIN VIDEO CLIP)
CHRIS CHIAMES, SENIOR VICE PRESIDENT, US AIRWAYS: US Airways was impacted more than any other U.S. carrier after September 11. While some other carriers were involved in the terrorist actions, we took the brunt of the aftermath as far as the East Coast travel that evaporated.
(END VIDEO CLIP)
O'BRIEN: Now a question: What do you do if you have a ticket on USAir today? Don't worry about it. The airline says it will be business as usual. The airline services some 200 cities around the United States and many more around the world. Those flights are still on schedule and will continue.
Down the road, however, it's a little more speculative. They may have to give up some airlines -- some planes, they may have to sell- off some routes, and all tickets will be honored, but they may have to reroute passengers through other cities. You may have to have a new routing.
The airline has received $500 million in loans to maintain operations for the time being. That means that not only will the planes continue to fly, but the employees will continue to get paid, all 35,000 employees. There may, however, be some reductions in force down the road as the company seeks reorganization through the courts.
The worst news may be for stockholders. The US Airways stock closed at $2.45 a share on Friday, up a nickel, but the shareholders may lose their investments.
How long will it last? Well, of course, nobody can say for sure, but airline officials said they hope to emerge from bankruptcy a stronger, better, more competitive airline by early next year -- Paula.
ZAHN: Everybody is hoping for that. Thanks so much, Tim.
And as Tim just mentioned, for all you folks who have to fly in the near term, hopefully there won't be too many disruptions.
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