Tuesday June 11, 1:31 PM EDT (Full text of press release provided by Standard & Poor's) NEW YORK, June 11 - U.S. Airways Inc. (U) (CCC+/Watch Neg/--), the principal operating subsidiary of US Airways Group Inc. (CCC+/Watch Neg/--), filed an application for a $900 million federal loan guaranty, though it has not yet obtained agreement to requested concessions from its unions and other key parties. Standard & Poor's ratings and CreditWatch status on both entities remain unchanged. The filing was expected, though the company's management had hoped to reach at least preliminary agreement with its unions before submitting a business plan to the Air Transportation Stabilization Board (ATSB), which reviews loan guaranty applications. The deadline for loan applications is June 28, but US Airways will have the opportunity to amend its application if and as it reaches agreement with labor, vendors, lessors, and other parties. Management is seeking to implement $1.3 billion in annual cost concessions, $950 million of which would come from organized labor. Union leaders acknowledge the severity of US Airways' financial plight, but are so far offering more limited concessions in ongoing negotiations. Labor is expected to be the key hurdle in obtaining a loan guaranty, as some concessions from other parties is likely and approval by the ATSB is also judged probable if the company can present a business plan incorporating substantial cost savings. If US Airways is unable to obtain the cost concessions and a loan guaranty (which would cover $900 million of a $1 billion total loan), it will likely file for bankruptcy. Although the company does not face a near-term liquidity crisis, it will likely run short of cash next winter and might well choose to enter Chapter 11 immediately rather than wait for its cash to drain away. If US Airways reaches agreement with its unions and other parties on a substantial portion of the concessions being sought, Standard & Poor's would change the status of the CreditWatch listing to developing on US Airways Inc. and US Airways Group Inc., incorporating the potential for a modest upgrade should the loan application be approved and the concessions materially improve the company's financial prospects. The review will also examine whether the proposed plan involves debt restructuring of any rated securities that would be considered a default on their original terms, and thus cause the corporate credit rating to be lowered to 'SD' (selective default). ©2002 Reuters Limited.