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Another Big US Bankruptcy - ABC Online

  1. Dave R

    36,181 posts.
    Cash-strapped airline US Airways has filed for bankruptcy protection, saying it planned to use the reorganisation process to recover after a blow dealt to the industry by the September 11 attacks.

    The company made the announcement shortly after filing its petition with the US Bankruptcy Court in Alexandria, Virginia, just outside the Washington DC.

    "US Airways will continue to operate while we complete our financial restructuring, and our customers should be confident that we will continue service to the more than 200 communities in our network," US Airways chief executive David Siegel said.

    Mr Siegel said US Airways employees will continue to be paid on their regular schedule and receive their benefits.

    But the petition said the airline's liabilities had reached approximately $US7.83 billion, exceeding its assets by about $20 million, which experts say could complicate its financial turnaround.

    To finance its reorganization process, US Airways said it had secured $500 million in debtor-in-possession funds from a consortium of banks led by Credit Suisse First Boston and Bank of America.

    According to Mr Siegel, the participation in the scheme of such top-tier institutions was a strong endorsement of the company's restructuring plan and an indication of the banks' overall confidence in the eventual rebound of the airline sector.

    The bankruptcy court has scheduled its first hearing on the US Airways petition for Monday.

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