One carrier out of bankruptcy, another one in
Just as US Airways emerges from Chapter 11 bankruptcy, Air Canada enters bankruptcy proceedings.
US Airways emerged from Chapter 11 after securing $1.24 billion in financing. It has met its 31 March target for exiting from Chapter 11, but warns that the poor state of the economy and effect of war in Iraq will make recovery difficult.
US Airways president and chief executive, David Siegel said: “Securing the $1.24 billion of added capital funds was critical to boosting our liquidity, executing our business plan, and weathering the very difficult operating environment that airlines face due to the Iraqi war and general economic weakness.”
Mr Siegel also called on the US Government to offer financial aid to airlines. He said: “I am very hopeful that Congress will respond with appropriate relief for the losses airlines are suffering because of the war and more stringent security requirements.”
Air Canada announced late yesterday that it has filed for protection under the Companies’ Creditors Arrangement Act in order to restructure. The carrier is planning widespread wage cuts in order to stream line costs.
President and chief executive, Robert Milton urged passengers that it would be business as usual. He said: “It has been repeatedly demonstrated that the action we have taken today to restructure will not create a disruption to service nor should it impact in any way our commitment to safety and customer service – this has been demonstrated by US Airways and United Airlines in recent months.”
He added: “The business model is broken and it must be fixed without burning any more furniture.”
The US’ largest carrier, American Airlines is also in financial trouble, and doing everything it can to fend off Chapter 11 bankruptcy. The carrier lost $2 billion in 2002.
Read our previous stories:
17-Mar-2003 American ‘doing its best’ to avoid bankruptcy
03-Dec-2002 US Airways to make further cuts
23-Sept-2002 US airlines seeking government support
12-Aug-2002 US Airways files for bankruptcy
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