US Airways not near bankruptcy after all Wolf reports airline better off than many thought
By Jayne O'Donnell
US Airways is financially strong and has not considered bankruptcy reorganization after the Sept. 11 attacks, Chairman Stephen Wolf says.
''This company has some core financial strengths,'' Wolf said Thursday in an exclusive interview with USA TODAY.
US Airways also hopes to avoid seeking federal loan guarantees that were part of the government's $15 billion bailout package for the airlines.
''I don't think anybody wants to do that,'' Wolf said during a nearly 1-hour interview aboard a US Airways Shuttle flight to New York, the first flight out of Reagan Washington National Airport since the attacks.
The airport reopened Thursday under tight security and a limited schedule.
US Airways has often been mentioned as one of the U.S. airlines most likely to seek protection from creditors because of the devastating downturn in air travel since the attacks.
US Airways says that it has just over $1 billion in cash. That includes $160 million from the first installment of government aid. The airline says it expects to receive an additional grant of $180 million this month. The government's package includes $5 billion in grants and $10 billion in loan guarantees.
Many airlines are wary about accepting government-backed loans because of the conditions that could be attached and the possibility the government could become a major shareholder, a position it gained at Chrysler when the automaker got its $1.5 billion bailout in 1980. Airlines say they view the guarantees as a backstop that could help boost private lenders' confidence in financing airlines now.
Wolf said US Airways' cash, coupled with a ''fairly significant'' number of airplanes it can borrow against, puts the airline in far better financial shape than many believed.
He said his airline's recent elimination of more than 11,000 jobs -- including 1,350 pilots -- cuts about 25% of the carrier's workforce. US Airways is on a ''very vigorous cash-conservation program,'' he said.
''It's our fervent hope and current belief that we will not have anymore layoffs,'' he said, adding that 11,000 ''is not the final number, but it shouldn't vary very much at all.''
Although few airlines have the money or interest for mergers now, some experts say the depressed stock prices of airlines such as US Airways may make them takeover targets. United Airlines had offered $60 a share for US Airways in May 2000. That deal dissolved this summer because of government opposition. US Airways' shares closed at $5.20 Thursday.
''When airlines have gone bankrupt in the past, it was purely for cash flow,'' said Morgan Stanley airline analyst Kevin Murphy. ''What I think will happen in this unique environment with America West or US Airways is that other carriers may acquire them at a very low price.''
Wolf also said he's not thinking about seeking another merger partner. ''We're just focused on running our own company and hopefully doing that very successfully,'' he said.