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US Airways Mulls Restructuring Plan

TSC Staff

US Airways (U Quote) is trying to develop a restructuring plan that would, among other things, lower the company's cost structure and increase the number of jets in the carrier's regional system.

In a filing with the Securities and Exchange Commission, the airline said it expects that any restructuring plan would be supported by a government loan through the Air Transportation Safety and System Stabilization Act, which Congress passed to offer assistance to the nation's carriers after the Sept. 11 terrorist attacks.

US Air said it needs its employees, suppliers and financial backers to get behind the plan. Otherwise the airline suggested it might be forced to consider filing for bankruptcy.

In the first quarter, the company reported revenue of $1.7 billion and an operating loss of $286 million. As of March 31, US Air had cash, cash equivalents and short-term investments totaling $561 million. The company's balance sheet on that date listed current assets of just under $1.5 billion and current liabilities of $2.8 billion.

US Air said it has a higher amount of debt compared with equity capital than most of its main competitors, and the company hasn't generated positive operating cash flow since Sept. 11. In addition to being highly leveraged, US Air said it continues to have a higher cost structure than the other major airlines and that it is suffering more from the terrorist attacks than its competitors.

Shares of US Air were losing 22% to $3.84, a 52-week low, in afternoon trading on the New York Stock Exchange .