The head of US Airways told employees that the carrier may break even in its second quarter but that the financial outlook for the rest of the year was uncertain.
In his weekly recorded telephone message to employees Thursday, Bruce R. Lakefield, US Airways president and chief executive, said the second quarter was usually the Arlington-based airline's strongest period and that the carrier counts on it to "help carry us through the year," he said. The text of Lakefield's message was filed with the Securities and Exchange Commission yesterday.
Lakefield said the airline still needs about $800 million worth of concessions from its employees to avoid filing for Chapter 11 bankruptcy protection a second time. US Airways cut nearly $2 billion in expenses, including $1.2 billion in wages and benefits, during its first bankruptcy last year.
"If we don't get labor cost reductions we have targeted, combined with the effects of abnormally high fuel prices and expansion of low-cost competition, we could see losses in the third and fourth quarters comparable to what we experienced in the first quarter," Lakefield said.
US Airways lost $177 million in the first quarter.
Under the terms of its $800 million federal loan guarantee with the Air Transportation Stabilization Board, US Airways has to show significant cost reductions through the remainder of the year and return to profitability in 2005.
"We must stay in compliance with the conditions of our federal loan guarantee, or we run the real risk of losing the cash from the loan," Lakefield said. "Without a lower cost structure, US Airways could just run out of steam some time next year."
The airline wants to have agreements with all of its employee groups by the end of the summer so new contracts could be ratified in September, said US Airways spokesman David Castelveter. So far, only the pilots have agreed to concession talks. The two unions representing the machinists and the airline's dispatchers and training instructors have balked at negotiations.