ARLINGTON, Va. - US Airways Group Inc., the seventh-largest U.S. carrier, deferred some aircraft lease and loan payments yesterday in a restructuring plan to reduce costs and avoid bankruptcy.
US Airways expects the lessors and lenders to agree to the deferrals on the older Boeing Co. aircraft, the carrier said in a statement. If they instead file default notices that trigger defaults on other types of debt, US Airways said, it might have to file for bankruptcy protection to complete the restructuring.
The carrier is trying to shave $1.3 billion of its annual costs over the next seven years, including concessions from workers, and applied for a federal loan guarantee of $900 million to help it secure $1 billion in new financing. US Airways has said it may seek bankruptcy protection if can't get the concessions and financing.
"The fact that there's serious discussions about these payments is enough to raise real concerns on our part," said Sean Egan, an analyst at Egan-Jones Ratings Co. The company has a "C" rating on the US Airways debt, and Egan said he may downgrade the rating to "D" within 24 hours.
Shares of the carrier fell 23 cents to $3.65. The statement was released after the close of trading.
US Airways was one of the carriers hardest hit by declining travel demand after the Sept. 11 terrorist attacks because of its heavy concentration of flights on the East Coast, where the attacks occurred. The airline was also hurt by the extended shutdown of Washington's Reagan National Airport.
The company declined to say how many aircraft are affected and what the value of the deferred payments is. The carrier also declined to specify the lending and leasing entities.
"We anticipate that the lessors and lenders affected will voluntarily participate," US Airways Chief Executive Officer David Siegel said in a statement.
The company said the notices about deferring payments applied mainly to lessors and lenders, and included some other creditors as well. US Airways also is trying to eliminate some of the debt.
The company also is negotiating with its labor unions on pay and benefit concessions and earlier had told unions that it wanted to reach agreement on those terms by mid-June.
US Airways is having "productive discussions" with the groups, said spokesman David Castelveter.