US AIRWAYS FILES MOTION FOR
INTERIM RELIEF UNDER SECTION 1113 (e)
Company seeks to build cash for slow winter season
but will continue to negotiate with unions pending Court ruling
ARLINGTON, Va., Sept. 24, 2004 -- US Airways Group, Inc. today filed a motion seeking interim relief from the company’s collective bargaining agreements with the Air Line Pilots Association (ALPA), Association of Flight Attendants (AFA), Communications Workers of America (CWA), International Association of Machinists and Aerospace Workers (IAM), and certain units of the Transport Workers of America (TWU), under Section 1113(e) of the U.S. Bankruptcy Code.
The motion was filed with the U.S. Bankruptcy Court for the Eastern District of Virginia, which is overseeing US Airways’ Chapter 11 restructuring.
In its motion, the company emphasized that the request for interim relief is made in order to maintain US Airways as a going concern and “preserve approximately 34,000 jobs, preserve air service to hundreds of communities, build the cash reserves needed for the winter, give customers comfort that there is adequate cash for continued operations, and ultimately, avoid the threat of liquidation.”
“We have had constructive discussions this past week with all of our labor groups and we will continue to seek consensual agreements with our unions, pending the Court’s ruling on the motion,” said Bruce R. Lakefield, US Airways president and chief executive officer. “Nevertheless, we must move quickly to secure cost reductions, build cash reserves and send the signal to our financial partners and our customers that we will actively manage this restructuring and not allow the company to be swept up in speculation about our future.”
The interim relief request seeks $38 million per month in cost reductions from labor groups, effective immediately upon the Court’s approval. In addition, US Airways will implement capital expenditure reductions and a series of actions to be announced shortly to reduce non-labor and management costs and generate an additional $5 million per month of savings. These actions do not require court authorization.
US Airways told the court that it meets the “irreparable harm” standard for interim relief and must secure cost savings immediately because financial projections show that in order to avoid a cash crisis in early 2005, it must accrue roughly $200 million in additional cash.
“Over the next six months, we will be faced with significant aircraft lease payments, the traditional seasonal slowdown in both business and leisure travel, and the likely sustained impact of high fuel prices. Waiting for a cash crunch to be right in front of us is simply too late, and if we were forced to implement interim relief at a later date, the pay cuts would be deeper and even more painful. While I don’t relish asking US Airways employees to make sacrifices, securing this short-term relief while we continue to negotiate new permanent labor agreements will allow us to complete an orderly restructuring and implementation of our Transformation Plan,” said Lakefield.
US Airways is the nation’s seventh-largest airline, serving nearly 200 communities in the U.S., Canada, Europe, the Caribbean and Latin America. US Airways, US Airways Shuttle and the US Airways Express partner carriers operate over 3,300 flights per day. For more information on US Airways flight schedules and fares, contact US Airways online at www.usairways.com, or call US Airways Reservations at 1-800-428-4322.
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