=20 ---------------------------------------------------------------------- This article was sent to you by someone who found it on SF Gate. The original article can be found on SFGate.com here: http://www.sfgate.com/cgi-bin/article.cgi?file=3D/news/archive/2002/06/10/f= inancial1844EDT0322.DTL ---------------------------------------------------------------------- Monday, June 10, 2002 (AP) US Airways applies for $1 billion loan under federal guaranty program MATTHEW BARAKAT, AP Business Writer (06-10) 15:44 PDT ARLINGTON, Va. (AP) -- US Airways filed Monday for $1 billion in loans under a federal guaranty program that the airline says is its only way to avoid bankruptcy. US Airways is the second major carrier to apply for the loans, which were approved last year after Sept. 11 as part of an industrywide bailout. America West Airlines, which is less than half the size of US Airways, received $429 million last year in federally backed loans. Other airlines have steered clear of the loan guaranty program because of the strict conditions attached, industry advocates say. Only $900 million of the $1 billion proposed loan would be federally guaranteed; federal regulations require that US Airways obtain $100 million in loans on the private market without any federal guarantees. The Arlington, Va.-based carrier must submit a detailed restructuring pl= an to the Air Transportation Stabilization Board to demonstrate its ability to repay the loans. The airline wouldn't discuss the specifics of its application, but it likely gives the government the option to purchase a certain number of shares in the airline, letting it profit from the deal if US Airways gets back on its feet and its stock price recovers. US Airways closed Monday at $3.10 a share on the New York Stock Exchange. The application also includes management's plans to reduce costs by seeking concessions from its vendors, lenders and employees. The airline has said it plans to reduce costs by $1.2 billion annually, with $950 million coming from employee concessions. Negotiations with those groups are incomplete. But Roy Freundlich, spokesman for the Air Line Pilots Association, said "negotiations are progressing." The union offered Monday $400 million in annual concessions, including a pay structure that rolls back salaries to their 2001 level, eliminating pay raises of 17 and 16 percent the pilots received in 2001 and 2002, respectively. Management is seeking another 5 percent rollback on top of that, the uni= on said. The deadline to apply for the loans is June 28 and US Airways would be free to amend its application up until that time to reflect any changes that result from its union negotiations. "Our intent is to restructure US Airways and make it a profitable and successful airline that will be a competitive force, especially on the East Coast," said US Airways president and chief executive David Siegel. "This loan guarantee is not an entitlement, and we know we must demonstrate our ability to repay the loan, to keep our costs in check, and have a viable business plan." The airline, which lost $2 billion last year, has said it could run out = of money by October without the federally backed loans. But legislation pending in Congress would postpone the any payouts under the loan program until Oct. 1. US Airways says that delay could also force it into bankruptcy. The House of Representatives and Senate differ on whether to postpone the loan program. A conference committee will resolve the issue. =20 ---------------------------------------------------------------------- Copyright 2002 AP