US Airways bankruptcy filing increases pressure on Delta and United

Airline Industry Information, Sept 13, 2004

AIRLINE INDUSTRY INFORMATION-(C)1997-2004 M2 COMMUNICATIONS LTD

The announcement that US Airways has filed for bankruptcy is not a complete surprise but will worry two of its major rivals, United Airlines and Delta Air Lines, which face problems of their own.

United Airlines has been under bankruptcy protection since December 2002 and has cut 40,000 jobs since the 11 September 2001 terrorist attacks. The airline is now seeking further savings from its employees after already cutting USD2.5bn in wages and benefits when the US government turned down a federal loan guarantee.

Delta Air Lines seems likely to follow US Airways into bankruptcy by the end of September 2004 after it failed in a bid to renegotiate the terms of USD1.5bn of its USD20bn worth of debt. A major restructuring plan was unveiled in early September 2004 which aims to cut 7,000 jobs and save USD5bn by 2006 but has yet to be ratified, reports The Associated Press.

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