This article from NYTimes.com has been sent to you by psa188@xxxxxxxxx US Airways Makes Cuts and Leaves Bankruptcy April 1, 2003 By EDWARD WONG US Airways emerged from bankruptcy protection yesterday with a federally backed $1 billion loan and a new $240 million equity investment. The airline said that it had completed all requirements to begin its first full day of operation outside of Chapter 11 today. As a result of the exit, it secured a $1 billion loan that was 90 percent backed by the federal government. US Airways received the $900 million federal loan guarantee last year from the Air Transportation Stabilization Board, which was set up by Congress after the Sept. 11 terrorist attacks to provide relief to the airline industry. When the carrier filed for Chapter 11 protection last August, federal officials said the company would still get the guarantee as long as it successfully emerged from bankruptcy. US Airways also received a $240 million equity investment yesterday from the Retirement Systems of Alabama, the state pension fund. The fund is the airline's main lender and will own a 36.6 percent stake in the airline, as well as get eight seats and 70 percent voting control on the 15-member board. David G. Bronner, chief executive of the pension fund, will sit on the board. "Securing the $1.24 billion of added capital funds was critical to boosting our liquidity, executing our business plan and weathering the very difficult operating environment that airlines face due to the Iraqi war and general economic weakness," David N. Siegel, the chief executive, said yesterday. Using bankruptcy laws as leverage, the airline has squeezed out $1.9 billion in annual cost savings since last August. Labor agreements reached in bankruptcy court make up $1 billion of that and are good until Dec. 31, 2008. The company said it also cut $500 million annually from aircraft debt and leases, and got $400 million in supplier renegotiations, management concessions and operating efficiencies. Nonmanagement employees, in exchange for their concessions, will get a 31.2 percent stake and four board seats. The Air Transportation Stabilization Board will get a 10 percent stake. US Airways said it intended to renegotiate leases at Pittsburgh International Airport to accommodate an increased use of regional jets. The company said it was negotiating with two regional jet makers, Embraer of Brazil and Bombardier of Canada, to place "a significant order in the near future." It said MidAtlantic Airways, its new regional service division, would start operations this fall. Even with all the cost-cutting, there are no indications that US Airways will become healthy anytime soon. It does not expect to turn a profit this year or next, and it is still operating in the same bleak environment that has pummeled American Airlines almost to the point of bankruptcy. "Certainly, you have to give them credit," said Jim Corridore, an industry analyst at Standard & Poor's. "They were very efficient in bankruptcy, the way they cut costs. But they'll have an immediate test when they come out." http://www.nytimes.com/2003/04/01/business/01FLY.html?ex=1050209358&ei=1&en=9e9a5aa6b44156a6 HOW TO ADVERTISE --------------------------------- For information on advertising in e-mail newsletters or other creative advertising opportunities with The New York Times on the Web, please contact onlinesales@xxxxxxxxxxx or visit our online media kit at http://www.nytimes.com/adinfo For general information about NYTimes.com, write to help@xxxxxxxxxxxx Copyright 2003 The New York Times Company