US Airways Likely To Seek Gov't Help

Reports First Quarter Loss Of $269 Million

(AP)  US Airways said Thursday it lost $269 million in the first three months of 2002 and that it would likely ask for loan assistance under a federal program created after Sept. 11 to help the ailing industry.

Congress made up to $10 billion in loan guarantees available to airlines as part of a larger industry bailout. US Airways would be only the second major carrier, after America West, to apply for assistance through the loan program.

Shares of US Airways fell 8 percent on the news, dropping to $5.70 in early trading on the New York Stock Exchange.

The Arlington, Va.-based carrier's first-quarter loss is equivalent to $3.97 per share, which compares with a loss of $171 million, or $2.55 per share, during the same period a year ago.

Excluding one-time items, the company lost $286 million, or $4.22 per share. Wall Street analysts surveyed by Thomson Financial/First Call had predicted a loss of $6.08 a share.

But US Airways' president and chief executive, David Siegel, said the results were unacceptable, even if better than Wall Street expected.

"To be successful, US Airways must restructure to lower its unit costs, optimize the revenue potential of its East Coast presence and improve its overall balance sheet position," Siegel said in a statement.

"To implement our restructuring plan," he added, "it is likely US Airways will file an application with the federal Air Transportation Stabilization Board for a government-guaranteed loan."

The government's strict conditions for the loans have kept most airlines from seeking them. If the government grants the loan guarantee, it would also get the option to buy a significant stake in the company.

US Airways employees have been warned that the airline might eventually seek salary concessions from its workers.

The airline is hoping that its pilots will approve as early as Thursday an agreement that would let the airline double its use of cheaper regional jets from 70 to 140. Airline officials have identified the expanded use of regional jets as a top priority.

The company said it has cash reserves of $561 million and considers its cash position stable.

US Airways had $1.7 billion in revenue for the quarter, compared with $2.2 billion in the same quarter last year.

The airline, which reduced capacity 23 percent following the Sept. 11 attacks, carried 11.8 million passengers in the 2002 first quarter, a decline of 16.7 percent compared to the 14.2 million in the first three months of 2001.