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<P>Creditors and shareholders of U.S. Airways found themselves in the upright and locked position Sunday as the nation's sixth-largest airline filed for bankruptcy protection.</P><P>
The Arlington, Va.-based carrier sought cover under the bankruptcy code's Chapter 11, but much of its trouble could be traced to Sept. 11. Remember when all U.S. airports reopened except for Reagan Washington, which was too close to the White House and other gov sites? Remember how it was weeks before the first lonely flights lifted at last? Guess which airline was the major carrier there. (Hint: It's the same one that bled $2 billion in the past year.)</P><P>
Even before the terror attacks, U.S. Airways was an animal in pain. To all the usual industry troubles, add these: fierce competition from discounters, a too-small area of service concentrated on the East Coast, and an unofficial battle with United Airlines for the highest labor costs in the business. Frustrated, the carrier tried to throw in the towel two years ago, reminded the Washington Post. In a bid to get bought by United, U.S. Airways pleaded to federal antitrust regulators that it was
its own. The feds disagreed and blocked the deal.</P><P>
Now, of course, U.S. Airways has a new flight plan. Among those likely to get airsick: shareholders, whose investment has vanished; employees, many of whom are expected to lose their jobs, even though their unions have conceded hundreds of millions of dollars in pay; and creditors, especially plane-leasing companies, which will collect only as much as a bankruptcy judge approves. (Where, by the way, is the reporter who will pick up the story of these leasing companies? Not one creditor was
named in any account we could find. Yet before we soak our hankies over U.S. Airways, we'd like to hear a word from the folks getting stiffed.)</P><P>
Need a silver lining? Check out the Wall Street Journal, which observes that Continental Airlines "soared to profitability" thanks to its time in rehab a decade ago. We're guessing that anecdote is on the minds of Texas Pacific Group, which is plunking down $200 million for two-fifths of U.S. Airways. Texas Pacific also played friend in need to Continental -- and pocketed 11 times its investment.</P><P>
Meanwhile, it will be "business as usual" for U.S. Airways customers, the company's chief assured a skeptical New York Times. The airline will even continue to track and to honor frequent-flier miles. Better still: Cautious customers can use U.S. Airways miles to book flights with its marketing partner, United. And, hey, according to an analyst quoted in the Journal, there's at least a 20% chance that United won't be the next major carrier to announce it's gone broke. - Lori Patel</P><P>
Shifts to Cause Rerouting of Some Booked Fliers<br>
US Airways Files for Bankruptcy Protection<br>
US Airways Group, Hit Hard By Terror, Files for Chapter 11<br>
<P>Follow-up has never been the media's strong suit. Once stories fade from page one, so does reporters' interest. And in this summer of corporate scandals, remembering back to Global Crossing's January implosion and bankruptcy is akin to trying to recall the fuss over chads.</P><P>
The Financial Times pegged the company's bankruptcy sale Friday a "long-awaited" transaction, but few other outlets seemed to be holding their breath. The dearth of coverage is too bad, because the shock value of the numbers alone is worth attention, especially with Enron and WorldCom following behind it in the Chapter 11 aisle. Bankruptcy, it seems, means never having to say you're sorry. Global Crossing owed $12 billion when it filed for bankruptcy in January. Its sale price? $250 million --
and that's for only a nearly two-thirds stake. Sound too low? Back in January, Global Crossing could have gotten much more, three times that much, and from the very same investment team, Asian conglomerates Hutchison Whampoa and Singapore Technologies Telemedia. But Global Crossing sniffed it was worth way more. </P><P>
Now that it has discovered it's worth way less, here's how the deal carves up what's left of Global Crossing's pie, pending the regulatory approval that's expected in about six months. The two investors get a 61.5% stake; bank creditors get 6%, and bondholders get about a one-third share. Who's missing from the slice-and-dice? Shareholders, of course, who get nothing. The company is unapologetic, and creditors feel lucky for the crumbs. "The reality is we could have done considerably worse,"
the Wall Street Journal quoted Edward Weisenfelder, a lawyer for the creditors. As for the shrewd buyers, the Financial Times quoted Hutchison's official statement that the deal would extend its telecom capabilities, particularly in its broadband service. But the Wall Street Journal speculated that the company is simply buying low so it can sell higher. </P><P>
Global Crossing's turned-down offer of $750 million is approximately the same amount the company's founder, Gary Winnick, reaped in personal riches from the sale of his stock, as the Journal noted in its page-one story on the telecom bandits. That's a lot of paper bits on any floor. - Deborah Asbrand</P><P>
Hobbled Global Crossing Accepts Buyout Bid From Asian Investors<br>
Buyers to pay $250 million for Global Crossing (AP)<br>
Firms to Buy Majority Of Global Crossing<br>
Before Telecom Bubble Burst, Some Insiders Sold Out Stakes<br>
<P>A Bertelsmann Heir Jockeys to Be Heir Apparent<br>
Martha Stewart likely to be subpoenaed<br>
US fraud law confuses Europe's top companies<br>
Creditors seek more WorldCom data (Wall Street Journal)<br>
Interpretation of Law Could Lead to Ban on Range of Executive Perks<br>
Microsoft changes its tune toward Linux<br>
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