By chance you haven't been following the story, USAir is once again on the verge of bankruptcy. They need major union concessions before their creditors will provide any additional capital. As soon as next Wednesday, according to the Wall Street Journal, they might miss a $110 million payment for their pension plans.

Several industry analysts say that this time around, they'll have a very hard time avoiding liquidation.

If you're considering booking on USAir, I'd think strongly about waiting or paying up for some level of certainty with another airline.

The law that requires other airlines to accept the tickets of bankrupt carriers is about to expire so you'll either be SOL or you'll need to deal with your credit card company about a refund or cancellation of the charge. Technically, if you're owed money for the value of an unused ticket by an airline, you become a creditor just like everyone else. That means, you'd get repaid when the case is settled.

Usually, that doesn't happen because filing bankruptcy still means a carrier will fly. But, with USAir, it's a 50/50 shot, at best, that they can make it through year end.

Of course all this bad publicity will increase the odds that the airline will go broke because most people will be afraid to purchase tickets on US Airways.

At this point travdis, it's actually beyond the point where bookings will significantly impact what will happen.

Either they get the union concessions or they don't. If they do, then their creditors will work to add capital and wait for bookings to get better. If they don't, then they'll have to use the $925 million of cash they currently have, which in reality will not last very long.

Well, we all saw what happened to Eastern Airlines when the Union called the airlines bluff.

Even if they file bankruptcy, a shutdown is NOT imminent. As stated, they have some cash to play with for a while. I wouldn't book a ticket for next summer but I WOULD book a ticket for the next few weeks.

Dan, not to be argumentative, but in this instance imminent collapse is a very realistic possibility.

US Air needs to have at least $700 million in cash at all times under its bank agreement. On August 4th it warned in an SEC filing it was in danger of violating that covenant. If they don't get the concessions and they don't have $700million, their banks wills make the determination that either it can be saved or it can't.

If it can't then you stop the bleeding and say "no more." No more effectively means you do not provide additional financing during the bankruptcy process. When that happens, you will be effectively out of business.

Ryan, you seem to know more than I do so I will defer to your judgement. However, I'd be surprised to see a "total" liquidation. Airlines are masters of operating in bankruptcy court.

I have a USAirways ticket next month and I'm not worried. Yet!

If purchased tickets are in jeopardy, I suppose my 4 1st class tickets purchased with FF miles for Thankgsiving week are soon to be useless? Will one of you break that to my mother and grandmother for me?

IF the airline liquidates, your free tickets on US are probably worthless. I have a lot of Dividend Miles now and I am frustrated by not knowing how to redeeem them! (Yes, I do know HOW but I can't take significant time off in the next year!)

If USAirways does liquidate, let's hope another carrier picks up as many (a) employees and (b) Dividend Miles as possible!

We have enough miles to get two free ticket and we were planning a trip for next June. My husband is busting his butt to redeem them for a ticket online, but reading all this is making me nervous. He is booking now....now I wonder if this is the right thing to do....Do we hang onto the miles or book a ticket, what is the best thing to do??????

If you are going to redeem award tickets for next year, I would try to redeem them on a partner airline like United. IF a liquidation occurs and you're holding USAir FF tickets, I think you'd be out of luck. But if you're holding tickets on another airline, there's a possibility they would honor them (even that's not guaranteed though).

US Airways is supposed to meet a pension payment on September 15th. The two options (it has the cash) are to defer the payment until September 30th or get the FA, Pilots, and mechanicss unions to agree to around $800 million in cuts.

It was pretty much in the bag that the cuts would be agreed to.

The pilots union has fallen apart and right now they are the problem. They agreed to a 12 1/2% paycut (actually, more hours for the same pay) but when it went to a vote on the board, it didn't pass.

A pass on the board would have sent the vote directly to the pilots.

Anyone think unions have outlived their usefulness?

Go Travel, you have pushed my hot button and I should post this under freaky Friday rants and raves, but I couldn't agree with you more on your last line....I deal with this issue daily in my job and get tired of hearing the word "grievance" every time you give an employee a directive to do a job they think isn't "theirs". It's totally out of control and they have literally priced themselves out of many a job...just ask the former steelworkers and coal miners from the Northeast.

Gosh, I have two USAirways flights this month. Thanks for the info. Just to be cautious, I will not buy any more flights from them until I see how things are going.

Dan,
Usually airlines are masters of bankruptcy. But, companies (airlines included) that are constantly in trouble at some point either fix the problem and at least stabilize or run out of enough "meat" on the bones to keep their bankers interested. (Think about Montgomery Ward for a moment. They were in and out of bankruptcy at least 3 times in a 10 year period. The last time, they had nothing left of value and the banks eventually pulled the plug.)

The bottom line, is it looks like USAir was on pace, or believed it was on pace, to go through as much as $225 million in cash from June 4th until the end of September.

The banks likely view $700 million of cash as the minimum level of comfort. If they allow the airline to go below that number, then USAir has to show that it has stopped burning through $225 million a quarter. If they can't get the concessions that get their costs down, then the banks are probably going to conclude, and soon, that the bones have been picked clean.

BTW, the reason the pilots aren't jumping on board with a new concession, probably means they are making the same assessment of the long-term viability. IF they think the inevitable happens regardless, then it becomes a question of do we get out now or get out a year from now and risk a portion of our pension and having pilots fill jobs that might be available elsewhere (UPS, FEDEX, etc.)

Update on USAir in today's paper. The pilots union has agreed to last ditch talks to try and work out concessions.

According to the NYTimes, the airline could file bankruptcy as early as Monday. Here's the problem, if they do file, they will have defaulted on the government loan guarantees they received last year. They apparently have no collateral left to pledge and probably wouldn't get new bankruptcy financing. Said another way, they have to pay all of their new bills in cash as no one, like their fuel vendors, will accept their credit.


If the can't get the concessions, they really have very little hope of pulling out of this mess. So either another airline steps in and picks up the business, like American did with TWA, or you'll need to hope the Congress extends the requirement for airlines to honor the tickets of bankrupt carriers.

If they do get the concessions, they might still need to file bankruptcy, but the likelihood of at least being able to fly for a period of time is more probable.

If it were me and I had holiday plans involving USAir, I'd think pretty strongly about putting a 24 hour hold on tickets with another airline sometime on Sunday or Monday as a plan B. If the situation with USAir gets a little brighter, you can always let the reservation expire.

Delta is struggling also. They are going to drastically cut flights out of Dallas.

If you think unions are the sole or even major cause for the air travel/ airline mess, you have definitely got filtered glasses on. And it should be obvious that the management and creditors are being just as political about putting the squeeze on pilots' union as the union has been "vice versa." Rats having a squabble over who gets to gnaw through the hull of a ship taking on water.

It's infinitely more complex than than a matter of personnel salaries and bennies, what with regulation then deregulation, subsidy then not subsidy, oil prices, equipment prices, air traffic control messes before and after PATCO and including technology, competition then not competition, frequent flyer programs, no hubs then hubs then no hubs, lousy management decisions, corporate board strangleholds and inflated executive compensation, just to START a list. If the pilots took a 60% pay cut, USAir would still be in big trouble.

I would love to think that the airlines that crash and burn are the ones that have given the passengers the worst deal, but all too often it's the opposite. USAir hasn't been my favorite airline for a long time, but it has served a lot of places no one else has.

CFC,
You left out one cause. The flying public. Many want first class service on priceline rates.

GoTravel,
Delta is in financial trouble and will scale back service. But, compared to USAir, it's in substantially better financial shape and the "liquidation" word hasn't been used.

An interesting report on-line (pages 3-7 in particular) that delves into the pilot and airline employee union issues. It's an interesting 5 minute read.

http://www.farragutintl.com/publicat...ewmath2003.pdf