- Nov 9, 2003
- 16,512
- 5,865
Airline stock low as investors meet
Shareholders fear 2nd bankruptcy is ahead as losses continue
TED REED
Staff Writer
As US Airways battles for survival, shareholders gather today for the company's first annual meeting since the airline emerged from bankruptcy protection in March 2003.
The meeting will take place near the Montgomery, Ala., headquarters for Retirement Systems of Alabama, which is US Airways' largest shareholder. It comes as US Airways shares trade close to their lowest point since the new shares were listed on the Nasdaq stock exchange in October.
Shares closed Tuesday at $1.50, slightly above its post-bankruptcy low of $1.45, set on Friday. The new shares were created after the airline's previous shares were wiped out in bankruptcy court.
US Airways, which has its largest hub in Charlotte, is seeking $1.5 billion in annual cost reductions, including $800 million in employee concessions. The nation's seventh-largest carrier is still losing money after securing $1.9 billion in annual cuts during bankruptcy.
Airline officials say the company may seek bankruptcy protection a second time if it can't secure more worker concessions.
The stock's low price reflects skepticism about whether the airline can survive, said Ray Neidl, analyst for Blaylock and Partners.
He said the carrier is under pressure to quickly reduce costs and craft a profitable operating plan.
"The market is saying that the odds of those things happening is long," Neidl said.
Aviation consultant Mike Boyd says investors are spooked by the hint of a second bankruptcy petition and the high price of oil. "Who knew oil would go to $42 a barrel?" he said.
Alabama's pension fund holds 36.2 percent of the airline's common stock and 71.6 percent of its voting stock. The pension fund is run by chief executive David Bronner.
Bronner last month asked David Siegel to resign as US Airways' chief executive, replacing him with longtime friend and adviser Bruce Lakefield, a former Lehman Brothers executive.
Other principal shareholders include the Air Transportation Stabilization Board, which oversees $726 million in federally backed loans; GE Capital Corp., which is providing regional jets for US Airways, and employee unions.
"None of the stockholders can be very happy, given where the company is right now," said Helane Becker, analyst for brokerage firm Benchmark Co. "They are trying to come up with a plan that will enable the airline to survive, but it's very difficult with fuel costs so high."
Shareholders fear 2nd bankruptcy is ahead as losses continue
TED REED
Staff Writer
As US Airways battles for survival, shareholders gather today for the company's first annual meeting since the airline emerged from bankruptcy protection in March 2003.
The meeting will take place near the Montgomery, Ala., headquarters for Retirement Systems of Alabama, which is US Airways' largest shareholder. It comes as US Airways shares trade close to their lowest point since the new shares were listed on the Nasdaq stock exchange in October.
Shares closed Tuesday at $1.50, slightly above its post-bankruptcy low of $1.45, set on Friday. The new shares were created after the airline's previous shares were wiped out in bankruptcy court.
US Airways, which has its largest hub in Charlotte, is seeking $1.5 billion in annual cost reductions, including $800 million in employee concessions. The nation's seventh-largest carrier is still losing money after securing $1.9 billion in annual cuts during bankruptcy.
Airline officials say the company may seek bankruptcy protection a second time if it can't secure more worker concessions.
The stock's low price reflects skepticism about whether the airline can survive, said Ray Neidl, analyst for Blaylock and Partners.
He said the carrier is under pressure to quickly reduce costs and craft a profitable operating plan.
"The market is saying that the odds of those things happening is long," Neidl said.
Aviation consultant Mike Boyd says investors are spooked by the hint of a second bankruptcy petition and the high price of oil. "Who knew oil would go to $42 a barrel?" he said.
Alabama's pension fund holds 36.2 percent of the airline's common stock and 71.6 percent of its voting stock. The pension fund is run by chief executive David Bronner.
Bronner last month asked David Siegel to resign as US Airways' chief executive, replacing him with longtime friend and adviser Bruce Lakefield, a former Lehman Brothers executive.
Other principal shareholders include the Air Transportation Stabilization Board, which oversees $726 million in federally backed loans; GE Capital Corp., which is providing regional jets for US Airways, and employee unions.
"None of the stockholders can be very happy, given where the company is right now," said Helane Becker, analyst for brokerage firm Benchmark Co. "They are trying to come up with a plan that will enable the airline to survive, but it's very difficult with fuel costs so high."
