mickey2001
Earning My Ears
- Joined
- Sep 20, 2000
- Messages
- 44
UPDATE 1-US Airways bankruptcy pummels air industry shares
August 12, 2002 12:10:00 PM ET
(Recasts first paragraph, adds US Airways stock halt, other details)
CHICAGO, Aug 12 (Reuters) - Shares of major U.S. airlines sank on Monday, led by a 27 percent initial drop in UAL Corp. (UAL), as US Airways Group Inc.'s (U) filing for bankruptcy protection on Sunday shook other large air carriers.
US Airways, based in Arlington, Virginia, sought Chapter 11 bankruptcy reorganization Sunday and pledged to keep flying while it worked to emerge from court protection in 2003.
A halt on US Airways stock remained in effect after the first 2.5 hours of trade.
UAL shares were off 90 cents, or 17.3 percent, at $4.30 near midday. The American Stock Exchange airline index , which includes most major U.S. airlines, sank 5.5 percent.
The rest of the majors also sank, with shares of No. 1 carrier AMR Corp. (AMR), parent of American Airlines, down 7.8 percent to $8.84. Shares of Delta Air Lines (DAL), the Atlanta-based No. 3 U.S. carrier, fell 4.45 percent to $13.95, and shares of No. 4 U.S. carrier Northwest Airlines (NWAC) were off 6.9 percent to $8.11.
Shares of Continental Airlines (CAL), the Houston-based No. 5 U.S. carrier, fell 5.9 percent to $8.58.
The bankruptcy filing by US Airways, the No. 6 U.S. air carrier, is by far the largest by any U.S. airline since the Sept. 11 hijack attacks pushed an already weak industry to the brink. US Airways listed $10.7 billion in liabilities and $7.8 billion in assets.
The filing heightened concerns about UAL, the No. 2 U.S. carrier, which is attempting an internal restructuring and has sought $1.8 billion in federal loan guarantees.
"This announcement does not change the fundamental prospects for any other airline we follow," Lehman Brothers analyst Gary Chase said in a report. "However, we expect that it will highlight the degree of uncertainty and risk in the process of successfully restructuring an airline outside the courts."
American Airlines, United and US Airways are all burning cash, while other major carriers are in a relatively stable cash position.
The US Airways bankruptcy may put some fire under UAL labor unions to accept wage concessions for the airline to better qualify for the $1.8 billion loan guarantee, Deutsche Bank Securities analyst Susan Donofrio said in a report.
"Unfortunately, this may not be enough to cause labor to cave in," Donofrio said. "As a result, we put the odds of United not getting their loan guarantee at 80 percent to 85 percent. We think that this would pave the way for a possible bankruptcy."
Bankruptcy would give United the ability to become healthier financially, which would help the industry in the long run, Donofrio added. REUTERS
August 12, 2002 12:10:00 PM ET
(Recasts first paragraph, adds US Airways stock halt, other details)
CHICAGO, Aug 12 (Reuters) - Shares of major U.S. airlines sank on Monday, led by a 27 percent initial drop in UAL Corp. (UAL), as US Airways Group Inc.'s (U) filing for bankruptcy protection on Sunday shook other large air carriers.
US Airways, based in Arlington, Virginia, sought Chapter 11 bankruptcy reorganization Sunday and pledged to keep flying while it worked to emerge from court protection in 2003.
A halt on US Airways stock remained in effect after the first 2.5 hours of trade.
UAL shares were off 90 cents, or 17.3 percent, at $4.30 near midday. The American Stock Exchange airline index , which includes most major U.S. airlines, sank 5.5 percent.
The rest of the majors also sank, with shares of No. 1 carrier AMR Corp. (AMR), parent of American Airlines, down 7.8 percent to $8.84. Shares of Delta Air Lines (DAL), the Atlanta-based No. 3 U.S. carrier, fell 4.45 percent to $13.95, and shares of No. 4 U.S. carrier Northwest Airlines (NWAC) were off 6.9 percent to $8.11.
Shares of Continental Airlines (CAL), the Houston-based No. 5 U.S. carrier, fell 5.9 percent to $8.58.
The bankruptcy filing by US Airways, the No. 6 U.S. air carrier, is by far the largest by any U.S. airline since the Sept. 11 hijack attacks pushed an already weak industry to the brink. US Airways listed $10.7 billion in liabilities and $7.8 billion in assets.
The filing heightened concerns about UAL, the No. 2 U.S. carrier, which is attempting an internal restructuring and has sought $1.8 billion in federal loan guarantees.
"This announcement does not change the fundamental prospects for any other airline we follow," Lehman Brothers analyst Gary Chase said in a report. "However, we expect that it will highlight the degree of uncertainty and risk in the process of successfully restructuring an airline outside the courts."
American Airlines, United and US Airways are all burning cash, while other major carriers are in a relatively stable cash position.
The US Airways bankruptcy may put some fire under UAL labor unions to accept wage concessions for the airline to better qualify for the $1.8 billion loan guarantee, Deutsche Bank Securities analyst Susan Donofrio said in a report.
"Unfortunately, this may not be enough to cause labor to cave in," Donofrio said. "As a result, we put the odds of United not getting their loan guarantee at 80 percent to 85 percent. We think that this would pave the way for a possible bankruptcy."
Bankruptcy would give United the ability to become healthier financially, which would help the industry in the long run, Donofrio added. REUTERS
