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.
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
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
its own. The feds disagreed and blocked the deal.
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
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
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
Shifts to Cause Rerouting of Some Booked Fliers
US Airways Files for Bankruptcy Protection
US Airways Group, Hit Hard By Terror, Files for Chapter 11
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
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.
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.
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
Hobbled Global Crossing Accepts Buyout Bid From Asian
Buyers to pay $250 million for Global Crossing (AP)
Firms to Buy Majority Of Global Crossing
Before Telecom Bubble Burst, Some Insiders Sold Out Stakes
A Bertelsmann Heir Jockeys to Be Heir Apparent
US fraud law confuses Europe's top companies
Creditors seek more WorldCom data (Wall Street Journal)
Interpretation of Law Could Lead to Ban on Range of Executive