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Breaking News

U.S. Airways Files for Chapter 11

Aired August 11, 2002 - 18:01   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

CAROL LIN, CNN ANCHOR: Our breaking news. CNN has learned US Airways is filing for Chapter 11 bankruptcy protection. CNN's Patty Davis joins us now with more out of Washington -- Patty.
PATTY DAVIS, CNN CORRESPONDENT: US Airways is promising to continue all flights, keep them operating, keep paying its employees, even though it has filed for Chapter 11 bankruptcy today. The airline was hard hit by September 11, a slowdown in business travel, before that, the recession.

Now, one of its major hubs, Washington's Reagan National Airport, did not fully reopen until several months after the September 11 attacks. All of that combined really hurt this airline, and in essence, forced it into the position of having to seek bankruptcy protection.

The airline lost more than $1.5 billion in the past year alone. Part of the strategy here by US Airways: Get its financial house in order with this bankruptcy. It's already gotten concessions from its pilots and flight attendants. It is trying to line up $900 million loan guarantee from the federal government, and this may help it do that as it goes forward.

Now, if we look at the number of flights this airline has, the departures every day, more than 1,400. US Airways Express, more than 2,200. The shuttle itself, more than 90 departures. A total of 3,700 flights, departures every day. The corporate headquarters, located in Arlington, Virginia. It has about 311 airplanes, more than 35,000 employees.

And those airplanes were one of the major sticking points that it was still having, trying to emerge financially from its financial problems. It wanted to renegotiate the lease on many of its aircraft, and it was unable to do that. This bankruptcy protection, this Chapter 11 action here, will more easily allow the airline to do that -- Carol.

LIN: Patty, you mentioned that the flight attendants and the pilots made concessions in their labor negotiations. Are there guarantees as a result of that, at least, during this bankruptcy proceeding that there won't be layoffs?

DAVIS: Well, as far as the concession packages go, the CEO of US Airways said in an interview a couple of weeks ago that those packages would not be affected. As far as layoffs, good question. I think we just have to wait and see about that. But it appears that since these packages have been negotiated in advance, they're taking pretty hefty pay concessions, that it appears many of these employees will be able to keep their jobs.

LIN: All right. And is this an indication of any problems in any other airlines? Do you expect that we're going to be hearing bankruptcy announcements from others as well?

DAVIS: Well, that's also a good question, and who knows the answer to that? But the airline industry still is bleeding very severely from the September 11 terror attacks. Also, the recession, and business travel cutbacks.

At the same time, it's having to cut business fares, it's having to offer lower fares for you and I as we travel on leisure fares. So this industry really having a rough time right now. The first one now since September 11, the first major airline now, US Airways, having to declare bankruptcy today -- Carol.

LIN: Well, Patty, I know you've been scrambling on this breaking news, and we're very grateful that you were able to break it for us on our 6:00 hour. Thank you very much, Patty Davis.

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