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Tuesday, 20 August, 2002, 06:21 GMT 07:21 UK
US Airways admits $6.5bn extra costs
US Airways employee
The airline can pay its staff - at least for now
Stricken carrier US Airways has admitted to spending commitments worth $6.5bn, on top of already-known liabilities of $10.65bn.

The news emerged in a filing with the US stock market regulator, the Securities and Exchange Commission, after a meeting between the carrier and its creditors.

In the filing, the carrier said the extra commitments related to operating leases for aircraft with an estimated value of $4bn.

In addition, US Airways has made commitments to buy aircraft for $1.5bn.

Deep trouble

US Airways filed for bankruptcy protection earlier this month.

In the bankruptcy filing, there was no mention of the cash commitments.

Over the past financial year, the airline is reported to have lost more than $2.1bn.

Last month, US Airways pilots agreed to pay cuts amounting to $465m a year, in an effort to keep the company afloat.

The airline recently asked the government to back a $1bn loan.

It is also seeking to save $1.3bn in annual expenses from its workers, suppliers, lenders and creditors.

Failed merger

In 2000, US Airways was set to be taken over by UAL Corporation, owner of United Airlines.

But the deal was called off the following year because of indications that regulators would block it and concerns about a slump in the economy.

Both airlines have since reported heavy losses, and United has warned that it might face bankruptcy as well.

US Airways had said a merger with United was its best chance for remaining profitable in an increasingly competitive industry.

Analysts expressed doubt whether the carrier would survive, saying its best prospects were either finding another merger deal or selling itself off in pieces.

A spokesman for the company said: "Many analysts in the US have given us very positive feedback about our chapter 11 filing, stating that we could emerge as a much leaner and more formidable competitor.

"The company has adequate cash resources to fund our business during the restructuring period and to fulfil all obligations to our employees, customers and vendors. We anticipate emergence from chapter 11 in the first quarter of 2003."

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