US Airways files for bankruptcy

It follows the rejection by key unions of wage and benefit cuts amid skyrocketing fuel prices and cut-throat competition.

The seventh-largest US airline, had been trying for weeks to wring concessions from its labor unions to avoid bankruptcy.

The bankruptcy filing listed in its petition assets totaling approximately 8.8 billion dollars and liabilities reaching nearly 8.7 billion dollars.

US Airways chief executive Bruce Lakefield acknowledged he had so far failed to convince the unions to agree to the pay and benefit cuts that would enable the company to meet all of its future obligations.

“Since we still lack the new labor agreements that are needed for the transformation plan to succeed, we must preserve the company’s cash resources that are required to implement the plan,” Lakefield said in a statement.

US Airways just emerged from Chapter 11 reorganization in March 2003, after promising to implement drastic cost-cutting measures to stay afloat.

Lakefield said the carrier had managed to cut expenses by almost two billion dollars during its restructuring process.

But it was eventually undercut by competition from low-cost airlines, and unabated fuel price increases since the 2003 invasion in Iraq, political trouble in Venezuela and legal trouble for a leading oil producer in Russia.

US Airways projects its 2004 fuel costs to be approximately 300 million dollars higher than previously expected.

To get out of the red, the carrier is seeking 800 million dollars in pay cuts from its five unions.

The filing with a US Bankruptcy Court signalled multiplying problems for the US airline industry, which is still struggling with the legacy of the September 11, 2001, attacks.

Economist say mainstay US carriers like US Airways, Delta, United and American Airlines are facing fierce competition from discount companies like Southwest and JetBlue, which are claiming an ever growing share of the market.

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