The US Airways filing came despite votes last week by its pilots and flight attendants to ratify the company's restructuring plan. Apparently, management felt other labor unions and vendors would not fall in line, and the relief provided by Chapter 11 proved too tempting. The nation's sixth-largest airline -- which was hurt badly by the delayed reopening of Washington's Reagan National airport following the attacks -- says it will continue service to all 200 communities in its network while it restructures. The stock is down about 80% today.
Meanwhile, The Washington Post calls United Airlines' application for a $1.8 billion government loan guarantee "a giant game of chicken." The question, it seems, is whether the feds, competitors, and unions believe it's more beneficial for the company to receive the loan bailout... or file for bankruptcy.
According to the Post, some unions are refusing pay cuts because they feel they'd come out just about as well if United does have to file Chapter 11. Other airlines are in a quandary because, if United does receive the loan bailout, it would obviously gain an advantage. If, on the other hand, it files for Chapter 11, "it could emerge as a more formidable competitor, with significantly lower debt service and labor costs."
Anybody got a coin?