Bankrupt US Airways Group Inc. asked a court to impose wage and benefit cuts from its union contracts Thursday to save money and survive, while the judge in the case said he wants the airline to remain in business.
The No. 7 U.S. airline, in bankruptcy for the second time in two years, also asked the court for flexibility to outsource maintenance and reduce the number of aircraft in its mainline fleet, which could result in furloughs.
"If relief is not granted, there is a high probability (US Airways) won't survive," the company's lead bankruptcy attorney Brian Leitch said at a hearing. "We're at the part where there are not many options, it's a simple reality."
Separately, Judge Stephen Mitchell of the U.S. Bankruptcy Court for the Eastern District of Virginia denied a request from the airline's mechanics union to delay the proceedings, saying it was important to move forward in considering the airline's request for court intervention.
"I want to do what's right, I want to do what's fair, I want to see this airline survive," the judge said.
US Airways is seeking a court-ordered 23 percent wage reduction for all of its union employees and reduced pension costs. It is trying cut deals with each of its unions to avoid court action but so far has only tentatively reached a deal for $300 million in givebacks from its pilots union.
Combined with non-union cost cuts already in place, US Airways hopes to save $38 million each month and accumulate $200 million in cash over the next five to six months. The Arlington, Va.-based airline said in court papers it may liquidate in February if it fails to raise enough cash.
Because its assets are mostly tied up in financing from its previous bankruptcy, the airline has virtually no chance of borrowing or attracting new equity.
Earlier Thursday, Mitchell approved the company's plans to make contributions to its employee pension plans on Oct. 15 and Jan. 15, 2005 but did not rule on union objections to the airline's decision to skip $110 million in pension payments last month.