ARLINGTON, Va. — US Airways has become the first major airline to declare bankruptcy as a result of last year's terrorist hijackings, a move that came 11 months to the date after the industry was rocked by the attacks.
US Airways, the nation's seventh-largest carrier, said flights will continue normally, and the company expressed optimism that it will emerge from bankruptcy early next year.
In its bankruptcy filing Sunday, the company listed assets of $7.81 billion and liabilities of $7.83 billion and said its cash flow was relatively stable. But Chris Chiames, US Airways' vice president for corporate affairs, said that would not last with the peak summer travel season about to end.
"You do not want to enter bankruptcy in a poor cash position," Chiames said at a brief news conference.
A hearing in U.S. Bankruptcy Court in Alexandria was scheduled for Monday to discuss the filing.
US Airways had been struggling well before Sept. 11, after federal regulators balked at a proposed purchase by United Airlines that would have given US Airways investors $60 a share.
After the attacks, no airline was harmed financially more than US Airways. The Arlington-based carrier is the largest airline at Reagan Washington National Airport, which remained closed for weeks after the attacks.
The airlines has no flights to or from Salt Lake International Airport.
In addition, Chiames said, the airline suffered disproportionately when many travelers opted to drive or take the train instead of making short-haul flights up and down the East Coast — US Airways' strength.
"Clearly US Airways was impacted more than any other carrier after Sept. 11," Chiames said.
Last month, the federal government agreed to guarantee $900 million of a $1 billion loan package the airline had hoped would allow them to stave off bankruptcy. But US Airways executives had always warned that bankruptcy was a possibility even if they obtained the federal loan guarantee.
Chiames said the bankruptcy will not affect the company's long-term restructuring plan, which calls for cutting costs by $1.2 billion a year.
The company also said it expects to generate an additional $200 million a year through a recently announced "code-share" agreement with United that allows the two airlines to sell tickets on each other's flights. The partnership combines US Airways' strength on the East Coast with United's strength on east-west routes.
United has lost more than $850 million this year, and the Chicago-based carrier retained a bankruptcy lawyer shortly after the Sept. 11 attacks. United Airlines is also seeking $1.8 billion in government guarantees.
The commercial aviation industry has lost a combined $1.4 billion this year.
US Airways has had the industry's highest labor costs, but they have been cut back significantly through a series of deals with its labor unions. US Airways has been trying to get $950 million in annual savings from its employees.
Recently completed deals with the flight attendants and pilots contain provisions for a bankruptcy filing. Roy Freundlich, a spokesman for the pilots' union, said the airline promised that it would not seek further concessions from them in bankruptcy court.
"The company has agreed that we have already given a tremendous amount," Freundlich said, noting that the new deal includes $465 million in annual concessions. "We are disappointed the company has found itself in a situation where it has to file for bankruptcy."
US Airways which owns 340 jets, last year carried 56 million passengers to 200 destinations in the United States, Canada, Mexico, the Caribbean and Europe.