ALEXANDRIA, Va. – US Airways, hard hit by slumping travel after the Sept. 11 attacks, filed for Chapter 11 bankruptcy protection Sunday, the company said.
The airline, which had mentioned bankruptcy as a possibility after it lost $2.1 billion during 2001, said all of its flights are expected to continue without interruption. The Arlington, Va.-based airline said it received $500 million in financing to keep operating while it reorganizes.
“US Airways will continue to operate while we complete our financial restructuring, and our customers should be confident that we will continue service to the more than 200 communities in our network,” said US Airways president and chief executive David Siegel. He said the airline will seek a return to profitability.
The airline, the nation’s seventh-largest and the 14th largest in the world, listed $7.81 billion in assets and $7.83 billion in liabilities in its petition, filed with the U.S. Bankruptcy Court for the Eastern District of Virginia, which scheduled a hearing for Monday at 10:30 a.m.
Although US Airways didn’t lose any planes on Sept. 11, its business was severely hurt when Reagan National Airport, the airline’s main hub, was shut down for three weeks and reopened with only a limited schedule.
US Airways has since been trying to wring $950 million in cost cuts from its 35,000 employees as part of a plan that was designed to stave off bankruptcy. Last week, it reached agreements with unions representing its pilots and flight attendants that called for wage and benefits cuts.
The airline said its debtor-in-possession financing will come from a group of institutions led by Credit Suisse First Boston and Bank of America Corp., with participation from Texas Pacific Group, which has signed a memorandum of understanding to provide $200 million in equity when the carrier emerges from bankruptcy.
“In the face of an uncertain and trying time for the industry, we have been impressed by the major strides taken by US Airways’ management and employees to significantly improve the competitiveness of the airline,” said Richard P. Schifter, a partner with Texas Pacific Group. “Given the progress made to date, the time required in Chapter 11 to complete the restructuring should be relatively brief.”
The financing is in addition to the $1 billion collateralized loan that has been conditionally approved by the federal Air Transport Stabilization Board.
US Airways Group, Inc., which owns 340 jets, last year carried 56 million passengers to 200 destinations in the United States, Canada, Mexico, the Caribbean and Europe.
Copyright The Daily Texan