USAir disappoints with deeper losses

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The Independent Online
Deepening operating losses from USAir managed to disappoint even the airline's most pessimistic investors yesterday, prompting a sell-off in the troubled carrier's bonds and new rumours of a bankruptcy filing.

USAir, 25 per cent of which is owned by British Airways, said it lost dollars 180m ( pounds 115m) in the third quarter, including an operating loss of dollars 151m. The loss, which is equal to dollars 3.32 a share, was about 35 cents a share worse than Wall Street analysts had expected, despite a series of damaging announcements about the state of the company over the past month - including the suspension of its dividend and a fatal crash near Pittsburgh.

USAir said the results were disappointing and showed the urgent need for wages and work-rule concessions by its employees.

The company also warned that its fourth-quarter results will also probably come in below industry expectations.

Analysts warned again yesterday that British Airways could be forced to write off its entire dollars 400m investment unless USAir can reduce its costs substantially. But the carrier's attempts to dramatise the need for some dollars 500m in annual labour savings have so far failed to lure union negotiators back to the bargaining table.

Prices for the company's unsecured bonds - which were downgraded to 'junk' levels last month when USAir suspended dollars 77m in annual dividend payments to BA and to USAir's other principle shareholder, the investor Warren Buffett - fell to less than 60 cents on the dollar yesterday.

Its shares also lost another 1/8 to 4 1/8 .

The airline does not face an immediate liquidity problem, but may decide to file for Chapter 11 bankruptcy to allow it to reorganise its finances and force wage concessions on its employees.

But a bankruptcy filing would force a substantial write-off against BA's bottom line, all but erasing the pounds 300m interim profit the airline is expected to report next month.

USAir has not operated profitably since 1988.