US Airways 3-month recovery plan calls for luck By Barbara De Lollis USA TODAY As US Airways opens a three-month campaign to fly out of bankruptcy=20 reorganization, its survival may depend as much on good luck as smart=20 strategy and creditors' support. US Airways is counting on $1.8 billion in= =20 annual cost savings to power its transformation from a high-cost competitor= =20 that had its last profitable year in 1999 into a leaner, efficient=20 moneymaker by 2004, according to a reorganization plan filed with the=20 bankruptcy court late Friday. Achieving that vision requires fixing US=20 Airways' pension plan =97 underfunded by an estimated $3.1 billion over= seven=20 years =97 a problem for which airline officials don't yet have a solution.= It=20 also rests on assumptions about a key ally and the industry's recovery that= =20 the airline's plan admits might prove too optimistic. "There are lots of=20 hurdles ahead of them, and the pension is clearly one," says airline=20 consultant Mo Garfinkle. "But the biggest hurdle they have is: Are they=20 going to meet their revenue projections?" Among the challenges: =B7 The pension plan. Resolving this issue is one condition US Airways= =20 must meet to obtain a federal guarantee for most of a $1 billion loan it=20 will need after it emerges from reorganization. =B7 United Airlines' future. US Airways and United begin joint=20 marketing of flights next month, a deal that US Airways has previously said= =20 could bring in $200 million a year in revenue. But United's own bankruptcy= =20 reorganization may lead to cutbacks that could reduce that value. =B7 An unpredictable airline industry recovery. US Airways missed its= =20 revenue projections in September, October and November because of a=20 slower-than-expected recovery in air travel, which forced the carrier to=20 ask its unions for deeper concessions. The industry is likely to lose $7.4= =20 billion this year, excluding special charges, and $3.6 billion next year =97= =20 on top of $6.2 billion in losses last year, says UBS Warburg airline=20 analyst Sam Buttrick. A delayed economic recovery, another terrorist attack= =20 or war with Iraq could worsen the outlook. US Airways' supporters say the= =20 reorganization should give it the muscle to be a successful carrier. "It's= =20 going to be a powerful East Coast carrier with a competitive cost structure= =20 that ultimately will allow it to compete efficiently with Southwest,=20 JetBlue, AirTran and other low-cost-structure carriers," says Jonathan=20 Ornstein, CEO of Mesa Airlines, a regional carrier for US Airways. The=20 bankruptcy filing does not spell out plans for US Airways' route network,=20 which serves 203 cities. The airline says it is still negotiating airport=20 and aircraft leases and plans to submit details to the bankruptcy court=20 before the proposed voting deadline. In its financial projections, the=20 airline estimates it will lose $229 million in 2003 but make a $122 million= =20 profit in 2004. An expected $1 billion in reduced labor costs will last=20 through 2008. The reorganization plan also says: =B7 US Airways expects its key investor, the Retirement Systems of=20 Alabama (RSA), and unsecured creditors committee to endorse the plan by=20 Jan. 16. It expects to begin seeking creditors' support for the plan in=20 late January and to obtain court approval to emerge from reorganization in= =20 March. =B7 RSA will own 36.6% of the reorganized airline; the federal=20 government, 10%; unsecured creditors, 10.5%; GE, a leading creditor, 5%; airline pilots, 19.3%; other employees, 10.8%; and=20 management, 7.8%. US Airways' current stockholders will be wiped out. =B7 RSA will have eight of the new board's 15 seats, and labor will=20 have four. US Airways CEO David Siegel and two directors nominated by the=20 company and unsecured creditors will round out the board. The owner of Roger's Trinbago Site: Roj (Roger James) *************************************************** escape email mailto:ejames@escape.ca Trinbago site: http://www.tntisland.com CBC Website http://www.tntisland.com/caribbeanbrassconnection/ The Trinbago Site of the Week: (TnT News) http://www.tntmirror.com/ (TnT News) courtesy of Roj Trinbago Website & TnT Web Directory Roj's Trinbago Website: http://www.tntisland.com TnT Web Directory: http://search.co.tt *********************************************************