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US Air struggles to avoid bankruptcy
No. 7 airline makes last-ditch proposal to pilots union, but prospects for a deal are unclear.
September 10, 2004: 5:45 PM EDT

NEW YORK (CNN/Money) - US Airways Group made a new last-ditch proposal for concessions to its pilots' union Friday, a news agency reported, as the nation's No. 7 airline struggles to avoid a bankruptcy filing that could be just days away.

Jack Stephan, a spokesman for the US Airways chapter of the Air Line Pilots Association, said union executives were discussing the proposal, details of which were not disclosed. "I have no idea what (the pilots executive committee) will do with the proposal," Stephan said, according to Reuters.

That group rejected the company's latest plan for nearly $300 million in givebacks earlier this week.

Absent a new pact with its pilots, the airline is likely to file for bankruptcy court protection as soon as Sunday, a published report said Friday.

The New York Times said the filing was imminent, quoting people briefed on the situation. It would be the second trip into bankruptcy for the airline in just over two years, but this time it could find difficulty emerging from bankruptcy court protections.

Both the Times and the Wall Street Journal reported Friday that the company has no collateral with which to arrange interim financing in the event of a bankruptcy filing, forcing it to get by on unrestricted cash on hand and complicating any effort to reorganize.

Normally companies that file under Chapter 11 of the bankruptcy code, which allows for continued operations, announce a financing package that allows them to fund operations while operating under bankruptcy protection. Without such financing, there is a risk the company could be forced into Chapter 7 bankruptcy, which would lead to liquidation.

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The Times quoted airline spokesman Christopher Chiames as saying a final decision on filing has not yet been made, but adding, "All along in this process, we've acknowledged that a bankruptcy filing might be necessary."

Pilots at US Air will hold an emergency meeting Friday, but it was unclear if they would resurrect concessions that management insists its needs.

The special meeting of the executive committee of the Air Line Pilots Association at the airline will be held at a hotel at the Pittsburgh airport just days after the committee rejected a proposal for nearly $300 million in annual labor concessions.

The company says it must have $800 million in concessions finalized from all its unions this month to help avoid filing for bankruptcy. The company faces a deadline next week for a $110 million pension payment.

Bill Pollock, chairman of the union's executive committee, told pilots Wednesday the proposed concession deal, while painful, would be better than what might be forced on workers during bankruptcy.

Pollock also said minor changes to the latest proposal might satisfy the 12-member executive committee, which is sharply divided over the composition of givebacks that include hefty pay cuts, a reduction in pension benefits, and work rule and productivity changes.  Top of page

-- Reuters contributed to this story.



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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.