Usair

The Clinton administration neatly split the issues in the quasi-merger of USAir and British Airways. In approving the initial British investment of $300 million in USAir, Transportation Secretary Federico Pena did what was legally required under the aviation treaty between the two nations. By making the next $450 million British Airways investment conditional on a renegotiated treaty, he placed the issue in the political arena, where it belongs. And he retained a valuable bargaining chip for his dealings with the British.

When US Airways won approval yesterday to exit bankruptcy and join America West to form a discount giant to take on the likes of Southwest Airlines, it marked the latest attempt by two airlines to fortify themselves through a merger. But during a week in which two other large airlines entered bankruptcy court, many industry observers think that aviation needs to allow some weaker carriers to disappear. After a generation of many failed airline mergers, some are saying that the healthier airlines should resist the urge to merge, relieve some of the intense competition in the skies and then zero in on the good assets.

ARLINGTON, Va. -- Things were looking pretty good for USAir.Over the past six months, the airline has watched its revenues inch upward. Its stock price has climbed more than $4 a share since last May -- despite huge losses in 1992. It teamed up with cash-happy British Airways in January, giving the U.S. carrier cheap access to a global market. And it recently announced a popular new fare structure in the Northeast.But then Evelyn T. Davis shows up.A well-known millionaire publisher of a small Washington newsletter, Mrs. Davis is a minor stockholder in 120 blue chip companies.

ARLINGTON, Va. - US Airways Group Inc. met with two unions yesterday to try to agree on concessions before an Oct. 7 hearing at which a bankruptcy judge might let the carrier temporarily reduce pay 23 percent to help avoid "potential liquidation." The talks were confirmed by the company, the Airline Pilots Association and the Communications Workers of America, which represents the 5,800 customer-service and reservations agents. In a court filing Friday, US Airways said it needed immediate cost cuts of $38 million a month from those unions and three others as the No. 7 U.S. carrier nears the slow winter travel season.

IT'S BEEN A turbulent passage for USAir, the country's sixth largest airline and the dominant carrier at Baltimore-Washington International Airport. Over the past five years, USAir racked up $5 billion in red ink. But now, with skies brightening for all airlines, USAir is back in the black. And suddenly it is engaged in merger talks.Airline giants United and American Airlines are in discussion with USAir -- for good reason. Each lacks a strong north-south presence on the East Coast. USAir would provide a good fit and help fill seats on their transatlantic flights.

San Diego is thousands of miles away, but USAir's sale of its engine-maintenance operation there could hit home with some of the airline's mechanics here in Baltimore.The Arlington, Va.-based airline said Wednesday that it plans to sell the assets of its money-losing Pacific Southwest Airmotive subsidiary to Aviall of Texas, in a transaction that could leave more than 300 mechanics looking for work.Aviall has said it will vacate the San Diego location and combine Airmotive's assets with its Dallas engine-repair operation.

There's hardly a tougher business around these days than airlines. Their balance sheets have been battered by the lingering recession and by sharp fare-price cutting throughout the industry. The Persian Gulf war made things even worse for a while by causing an even larger segment of the traveling public to stay home, and it boosted fuel prices substantially.The widespread industry problems are shared by most of the airlines, but there are exceptions. Delta, American, Northwest and United have generally been profitable.

The recession has not been kind to USAir. Currently it is losing more than $1 million a day and has asked its workers, including 2,500 based at Baltimore-Washington International Airport, for temporary pay cuts and other measures to stem the losses and help return the carrier to profitability. The airline has also announced it will cut 14 flights from its schedule at BWI by January, in addition to some deletions earlier this year.USAir carries more than 60 percent of BWI's passengers, and is key to the airport's health.

In one of the strongest signals yet of its precarious financial position, USAir Group Inc. said yesterday that it will defer dividend payments on nearly $1 billion worth of preferred stock, including that held by its international partner British Airways.The unanimous decision by the airline's 16-member board came as the beleaguered carrier faced an $8 million quarterly dividend payment today on the Class A preferred shares held by Berkshire Hathaway Inc., the insurance and investment holding company controlled by Omaha investor Warren E. Buffett.

NEW YORK -- USAir Group Inc. announced another quarter of dismal results yesterday, losing $84.9 million in the latest three-month period and showing no sign of a turnaround."

With time running out and its future on the line, US Airways Group will look to the leaders of the pilots union to do tomorrow what the union's negotiators refused to do over the weekend: accept the airline's demand for $295 million in pay and benefit cuts. US Airways is seeking $800 million in cuts from its employees, the third round of concessions it has sought in the past two years. With critical financial milestones looming at the end of September, the airline is pressing the unions to come to terms by Sept.

The chairman of US Airways said yesterday that its employees must agree to a third round of wage and benefit cuts worth $800 million in the next 30 days or the airline could be liquidated. Absent a deal with its unions, David G. Bronner, who runs Alabama's pension fund, the airline's biggest shareholder, said he would not invest any more money to rescue US Airways. Bronner's comments came as US Airways made a new contract proposal to its pilots' union, the only labor group with which it has opened formal talks.

A smaller US Airways emerged yesterday from bankruptcy with $1.24 billion in new financing and its chief executive pledging to continue looking for ways to cut costs and boost revenue. "This legal process is done, but we're going to lose money this year and this war brings out a lot of uncertainty, and so we're going to have to continue to adapt and refine our business model," said David N. Siegel, the carrier's chief executive. The Arlington, Va.-based airline, which cut expenses by $1.9 billion annually while in bankruptcy protection, hopes to further cut costs in light of reduced business.

NEW YORK - Global Airlines Corp. had "no assets" when the company offered to buy US Airways Group Inc. for $10 billion and Trans World Airlines Inc. for $298 million, the Securities and Exchange Authority claims. The SEC filed a civil suit against closely held Global and its chairman, Emil Bernard, seeking to block them from making similar offers in the future. "Global did not have the means to purchase either airline by tender offer or otherwise, as it had no assets or resources," the SEC said in a fraud complaint filed yesterday in federal court in New York.

US Airways Group Inc. is scheduled to emerge from bankruptcy tomorrow after having shed almost 17,000 employees, 128 airplanes and $2.1 billion in debt in what is being hailed as a textbook restructuring that could serve as a model for the teetering aviation industry. The airline will emerge under the control of the Retirement Systems of Alabama, which provided a critical $500 million in financing during the company's restructuring and will invest $240 million in the company once it leaves bankruptcy.

US Airways reached tentative agreements on concessions last night with unions representing its machinists and flight attendants, completing a package for an additional $200 million in wage and benefit cuts that the airline needed to avoid liquidation. The moves came as US Airways prepared to file a reorganization plan in U.S. bankruptcy court in Alexandria, Va. The plan, which a judge will consider at a hearing Jan. 16, was set to include proposals for returning the airline to profitability.

USAir Group Inc. yesterday reported a $393.1 million loss for 1993, far less than the previous year but dismal enough to suggest that the beleaguered carrier may not soon pull out of its 4 1/2 -year downward spiral.A turnaround, analysts say, will hinge on a tenuous combination of factors, including economic growth to generate more passengers as airlines reduce the number of planes they must fill.In addition, the Arlington, Va.-based USAir must continue cutting its costs, which are the industry's highest, largely due to its extensive route structure and work rules.

Raising the prospect of a long-awaited turnaround, USAir Group Inc. reported yesterday that its first-quarter losses narrowed by nearly $100 million as the company turned decidedly profitable last month.The Arlington, Va.-based carrier, which handles half the daily passengers at Baltimore-Washington International Airport, still lost money for the three months just ended. But the $42 million in operating losses was far less than the $140 million reported a year ago.USAir stock rose 21.3 percent, or $1.25 a share, to close at $7.125 a share.

Last summer, a bankrupt US Airways Group Inc. wowed airline analysts with a recovery plan that seemed likely to lift the troubled carrier out of a financial hole made deeper by its failed merger with United Airlines and the Sept. 11 terrorist attacks. But recent setbacks suggest elements of the Arlington, Va.-based airline's bankruptcy recovery plan may be in trouble as travelers book fewer trips. United's own bankruptcy, filed just last week, could shrink the benefits of a code-share alliance between the two carriers that was supposed to net US Airways $150 million in additional revenue annually.

IN 1996, WHEN what was then called USAir Group hired Stephen M. Wolf as top boss, airline director Mathias J. DeVito compared Wolf to hockey great Wayne Gretzky. Wolf's pay, at least, was Gretzkyesque. The executive immediately got stock options for 1.3 million shares, which is to say he could make $1.3 million for every $1 increase in the airline's stock. Over the next six years, Wolf got more than $45 million in options, stock grants, benefits and cash. In return, Wolf failed to rein in union pay, failed to make the company's Metrojet unit a serious contender, failed to merge the airline with United Airlines and failed to keep the company, now US Airways, out of bankruptcy court.