Reuters
US Airways Chairman: Liquidation Possible
Thursday August 19, 6:06 am ET
NEW YORK (Reuters) - US Airways Group Inc.'s (NasdaqNM:UAIR - News) chairman said employees must agree to $800 million in new wage and benefit cuts within 30 days or the airline might be liquidated, the New York Times said on Thursday, citing an interview with Chairman David Bronner.
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The No. 7 U.S. airline emerged from Chapter 11 bankruptcy protection last spring, financed in part with $240 million from Retirement Systems of Alabama, the pension fund Bronner runs.
A liquidation could take place under Chapter 7 of the U.S. Bankruptcy Code.
Bronner said that without cost-saving agreements with unions, he would not invest more money in the Arlington, Virginia-based airline.
He said agreements are needed well before September 30, when US Airways faces a series of covenants in its federally guaranteed loans, which secure its arrangements with aircraft lenders.
"Why would you put new money in, if they don't make a deal," Bronner said in the interview.
A spokesman for the Air Line Pilots Association told the newspaper the pilots union would not be pushed into a quick agreement. A vice president for the machinists union said his union would help the carrier save money, short of reopening contracts.
Bronner told the newspaper that he and other investors potentially would be better off if US Airways liquidated, because they could buy its planes, gates and routes at cheap prices, and not have to take on labor contracts. US Airways has higher operating costs than many discount carriers.
"It's a whole lot cheaper for me to have the assets and start over than to have the liabilities," Bronner said. The newspaper said he joked that the remains of US Airways could be used to start a new carrier named "Bama Air" in tribute to his home state of Alabama. But he said liquidation is "what you want to avoid."