Airline to pay overdue dividends US Airways uses $81.4 million to signal recovery

March 27, 1997|By Suzanne Wooton | Suzanne Wooton,SUN STAFF

US Airways said yesterday that it will pay $81.4 million in overdue preferred dividends and reinstate regularly scheduled payment of dividends on two series of preferred stock.

The Arlington, Va.-based carrier suspended preferred dividend payments in September 1994, when it was faced with serious financial losses.

A payment of $34.8 million authorized yesterday will clear arrearages on the carrier's senior preferred stock series, held by its largest shareholders, Berkshire Hathaway and British Airways. Last summer, the airline began paying some dividends toward those overdue payments.

The airline's board of directors yesterday also approved a back dividend payment of $46.6 million to holders of its Series B publicly traded preferred stock and declared regular quarterly dividend payments of $8.3 million on its Series A preferred stock and $4.7 million on its Series B preferred stock.

"These dividend payments underscore our determination to bring value to our shareholders as we build US Airways into the carrier of choice," said Stephen M. Wolf, chairman and chief executive officer.

US Airways, which carries about 45 percent of the daily passengers at Baltimore-Washington International Airport, was known as USAir until earlier this year.

The move yesterday underscores US Airways' substantially improved financial picture in the past two years. Under law in Delaware, where the carrier is incorporated, such dividend payments could not be reinstated until the company had a positive cash position.

USAir lost nearly $3 billion from 1988 to 1995. But last year, the company reported its second straight profitable year, with its $263.4 million in earnings more than doubling the previous year's.

However, airline officials say US Airways' future earnings are jeopardized if the carrier fails to reach cost-cutting agreements with its unions so it can compete more effectively with discount carriers like Southwest Airlines.

US Airways is asking its pilots for concessions so it can convert up to 40 percent of its flying into low-cost express flights. The airline says it needs the flexibility to operate smaller equipment and pay people less while flying more hours. Talks between the company and its unions are continuing.

Pub Date: 3/27/97

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