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Tue, Aug 17, 2004

Pilots Issue Finance Warning To US Airways

They say company will go out of business in months, unless...

Warning, Will Robinson! Warning!

If US Airways doesn't do something fast, it will go the way of the dinosaur -- and soon. That's the word in a financial report commissioned by the ALPA.

But here's the odd thing. Even though the airline's 3,400 pilots commissioned the report by Glazner and Company, the text of the report seems to bolster the airline's position in ongoing concession talks. Ironically, the pilots' union and others have said they doubt the situation is as bad as US Airways says it is. But unless the company changes its cost structure, Glazner and Company thinks US Airways will go belly-up in less than 270 days.

Even though it's not necessarily what they wanted to hear, pilots' spokesman Jack Stephan said the ALPA doesn't "disagree in principle with the conclusions reached by our investment banker."

Topping the list of upcoming expenses: US Airways is required to make a $130 million payment to its employee pension plan. If that doesn't happen, agreements reached during the company's bankruptcy could fall through and its creditors could demand immediate payment. The IRS could sanction US Airways, the Air Transportation Stabilization Board could demand its $900 billion loan be paid off and the company's aircraft lease holders could back out.

If that were to be the case, the report said it would result in "a run on the bank. If anyone of them begins executing on these capital calls, they all will, and the airline will fail."

FMI: www.usairways.com, www.alpa.org

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