=20 ---------------------------------------------------------------------- This article was sent to you by someone who found it on SFGate. The original article can be found on SFGate.com here: http://www.sfgate.com/cgi-bin/article.cgi?file=3D/chronicle/archive/2004/09= /13/MNGBO8O1RS1.DTL --------------------------------------------------------------------- Monday, September 13, 2004 (SF Chronicle) US Airways seeks 2nd bankruptcy in 2 years/Expert sees 50/50 chance airline= will fail Keith L. Alexander, Washington Post US Airways Group, Inc., filed for bankruptcy Sunday for the second time = in two years after failing to win needed wage and benefit cuts from its unions. The move raised new questions about the future of the airline, even as US Airways Chief Executive Bruce Lakefield said its flights will continue as normal under bankruptcy and that no major changes in operations were planned. "Our intention is to be the major carrier in the cities where we operate today and not to have any disruption in those cities," Lakefield said. But industry experts said the bankruptcy filing raised the prospect that the Arlington, Va.-based carrier could be forced out of business, throwing into jeopardy the carrier's routes, its 27,000 workers and millions of frequent flier miles. US Airways has to get new labor agreements with its workers within three to six months or it will not be able to emerge from bankruptcy, said analyst Ray Neidl of Calyon Securities. "They have a 50/50 chance," he said. "To do it, they will need the full cooperation of employees." The airline's chairman, David Bronner, warned earlier this summer that t= he airline could have a hard time emerging from bankruptcy because of difficulty attracting the needed financing. US Airways executives promised the first time the airline went into bankruptcy that its operations would change little, but then several flights were cut and unprofitable routes dropped. Lakefield refused to speculate whether the airline would have to trim routes or jobs. Under the bankruptcy, stockholders will probably lose their investments, including Bronner, whose investment group, Retirement Systems of Alabama, became the airline's leading investor during its last bankruptcy when it pumped in $740 million in exchange for a 37.5 percent stake in the carrier. Sunday's filing came as little surprise. The airline had begun meeting with outside attorneys and airline financing consultants weeks ago. The carrier has been unable to secure $800 million in pay and benefit concessions as part of its $1.5 billion cost-reduction plan. Under bankruptcy, US Airways buys time in facing some steep financial requirements, including a $110 million payment due Wednesday on its pension plan. US Airways' filing means that two of the nation's largest airlines are now flying in bankruptcy -- No. 2 United Airlines has been in reorganization for the past 18 months -- and third-ranked Delta Air Lines is dangerously close to seeking bankruptcy as well. All are suffering because they have labor contracts and other operating costs, along with enormous debts, that are far too high to be covered by today's declining ticket prices. The airline's first hearing is scheduled for today in the U.S. Bankruptcy Court in Virginia. The Los Angeles Times contributed to this report. ----------------------= ------------------------------------------------ Copyright 2004 SF Chronicle