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US Airways Misses Deadline But Gets a Little More Time From Creditors

Late Again, the Airline Gets an Extension from Two Key Creditors

April 15, 2005
True to its heritage, US Airways is behind schedule. It failed to meet today's deadline for filing a reorganization plan with the U.S. Bankruptcy Court. But in a brief statement, the company said it has reached agreement with its two key creditors, GE Capital Aviation Services and GE Engine Services, for an extension.

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The April 15 deadline for filing a reorganization plan has been extended until the end of the month. Like many other airlines, US Airways failed to foresee the sky-high fuel prices that have left budgets shattered, further complicating its efforts to emerge from bankruptcy.

The airline is still aiming for a June 30 target for emerging from bankruptcy, but must find another $100 million in cash from investors willing to bet US Airways will continue flying despite years of red ink and a turnaround plan that has been, at best, only partly successful so far.

In March, US Airways announced it had reached deals with two regional airlines for up to $250 million in financing.

Meanwhile, the ailing carrier continues to tighten its belt. So far this month it has shuttered airport clubs in Los Angeles, San Francisco and West Palm Beach, Florida. The company also said its Orlando airport club would not reopen. It's been closed since sustaining damage during Florida's rash of hurricanes last year.

At this point, there remains little more US Air can do to cut expenses. In late 2004 and early this year it wrangled significant contract concessions from its union employees, causing widespread bitterness in its ranks. A Christmas weekend foul-up resulted in scores of delayed and cancelled flights and thousands of angry customers.

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