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Friday, March 21, 2003

By Frank Reeves, Post-Gazette Staff Writer

US Airways has fallen short of financial projections used to obtain key private financing, but its principal backer said yesterday that he remains committed to getting the airline out of bankruptcy by the end of March.

David Bronner, head of the Retirement Systems of Alabama, said that the key issue preventing the airline from exiting Chapter 11 continues to be the inability of the company and its pilots to agree on a new pension plan.

The revelations about the airline's financial condition, which has been hurt further by a 20 percent drop in bookings the past week because of war fears, came during a hearing yesterday in federal bankruptcy court in Alexandria, Va. The airline also disclosed that it would not make a scheduled payment on aircraft leases from Airbus.

At the hearing, US Airways attorneys said discussions with the pilots union had reached an impasse. U.S. Bankruptcy Judge Stephen Mitchell earlier this week approved the reorganization plan on the condition that the pilots union and management agree on a new pension plan.

The airline must emerge from Chapter 11 in order to obtain $900 million in federal loan guarantees -- guarantees Bronner said he must have before he goes forward with a $240 million investment in the reorganized airline. US Airways has said it would like to pull out of Chapter 11 by March 31.

Whether it can largely depends on a successful conclusion to its talks with the Air Line Pilots Association about the pilots' pensions. Roy Freundlich, spokesman for the Air Line Pilots Association, said talks with the airline were ongoing and that he was perplexed by yesterday's comments by the airline's attorneys.