BREAKING NEWS: US AIRWAYS REPORTS NET LOSS OF $98 MILLION FOR FEBRUARY. AIRLINE WAS LOSING $3.5 MILLION A DAY. JANUARY'S LOSS WAS $3.2 MILLION A DAY. US AIRWAYS' PLAN TO PROFITABILITY HAS LOST ALMOST $200 MILLION IN TWO MONTHS. MARCH RESULTS NOT EXPECTED TO BE ANY BETTER. Where to begin? US Airways is out of bankruptcy. The DOT has released the Air Travel Consumer Report with some new additions to the line up. Our old buddy Rakesh Gangwal is in the news. Military experts say the worst fighting in Iraq is still to come. SARS is extending its wrath far beyond Asia. Airlines are pleading for more bailout money, which doesn't bail them out of anything. Allegheny County (PA) executives are upset (to use a kind word) at Team Siegel. Oil prices have dropped significantly since the war started, surprising everyone and certainly helping airlines. First up, let's discuss US Airways' emergence from bankruptcy and some of the possibilities. The good news is that, hopefully, the people who still want to fly will not be afraid to book on US Airways. We all know that a percentage of people will book away from an airline when it is in bankruptcy and its survival is in question. More good news is that US Airways now has access to about $1.2 billion in new capital. So, when was the last time US Airways had that amount of cash? Well, to be exact, it was just prior to the 9-11 terrorists attacks that US Airways had about $1.2 billion. Just over six months later, on March 31, 2002, US Airways' cash position had diminished to $561 million. Keep in mind that even though the company is out of bankruptcy, it is still losing money each day. US Airways lost about $3.2 million a day in January and things have not improved substantially since then, what with bookings being off and passengers reluctant to travel. Having all this new cash on hand for US Airways comes at a price. Just about everything, including the pencil sharpeners and paper clips, is now leveraged. The bad news is that US Airways could very easily slip back into bankruptcy. You can have the best plan to return to profitability, but if you don't have the customers, it's all for naught. As you read this, you can bet that US Airways is deciding whether or not to invoke the 'Force Majeure' clause .. as I have long suspected and told you they will. The company's load factor was poor before this war started. US Airways will have no choice but to make capacity adjustments. The question is: will those adjustments be made to reflect the war's impact or will they include the war's impact and then some? This will be the perfect opportunity for the company to fine tune the capacity issues but it will come at a steep price as more job eliminations will be announced and I suspect more planes will be parked. Just to give you an idea of where crude oil is; on March 10, a barrel of crude oil had a price of $37.78. Just after the bombing started, that price dropped to $26.91. On Wednesday, crude oil closed at $28.56/barrel. The company has invoked the 5% war pay cut to offset declining revenues. They continue to call it a "pay deferral" but the fact of the matter is that it is a pay cut. This is money that the employees could have in an interest-bearing account and when it is repaid in 18 months, it won't be repaid with interest. Also, the company says that if they report a quarterly profit before the end of the 18-month period, the 5% pay cut will be discontinued. Don't hold your breath on that one because the company does not expect to report a profit this year or next. There's your 18 months. --------------------------------- Do you Yahoo!? Yahoo! Tax Center - File online, calculators, forms, and more