For the second time in two years, US Airways, the nation’s seventh-largest airline, has filed for bankruptcy protection. The company immediately promised the airline would continue to operate and restructure itself into a low-cost carrier during the bankruptcy process.
“This management team isn’t here to preside over a liquidation,” said Brian Leitch, the airline’s lead bankruptcy attorney, adding that the carrier still seeks to become “a vibrant competitor” that can match the low fares and low costs of competitors like Southwest and JetBlue.
“We have come too far and accomplished too much to simply stop the process and not succeed,” Bruce Lakefield, US Airways’ president and chief executive told The Associated Press. “A restructured US Airways with low costs and low fares will be a dynamic competitor.”
U.S. Bankruptcy Judge Stephen Mitchell gave US Airways permission to use a government loan to fund daily operations and also gave the airline permission to continue its Dividend Miles frequent flyer program and its alliances with other airlines.
US Airways claims the filing was necessary after it was unable to obtain $800 million in annual cost cuts from its workers’ unions.
Prior to the filing, US Airways made a final effort to reach an agreement with its pilot’s union, minimizing proposed pay cuts and asking for increased flight hours per month.
Pilots opposed the deal, saying that workers had already made enough concessions during the carriers 2002 foray into bankruptcy.
A week earlier, the union refused to allow a vote on a company proposal that would have cut pay by 20 percent and retirement plan contributions by 50 percent.