By Keith L. Alexander
Washington Post Staff Writer
Friday, August 20, 2004

A "frustrated" chief executive of US Airways Group Inc. told employees yesterday that despite recent assertions from the airline's chairman, the carrier could survive a second bankruptcy filing -- but only with revised labor agreements.

In a recorded message to employees, chief executive Bruce R. Lakefield said that although another Chapter 11 filing was a "very real possibility," the carrier could emerge with a lower cost structure.

"While Chapter 11 is a possibility, the talk of an imminent shutdown, a disruption of service, or impending liquidation is simply not true," Lakefield said, frequently using the word "frustrated" to describe himself and other airline executives.

"If Chapter 11 becomes necessary, our survival will remain dependent upon transformation. One way or another, we need new labor agreements."

US Airways Chairman David G. Bronner said earlier this week said that the carrier had only a "1 to 2 percent" chance of surviving a second bankruptcy filing. Bronner said, unlike the airline's first bankruptcy in 2002, the airline likely would not get help from an outside investor or the government if it entered bankruptcy protection again.

Lakefield said he was disappointed that the Arlington-based airline still was not profitable and that it needed more cost cuts, which he said were "painful and enormous."

US Airways executives are trying to trim about $1.5 billion a year, $800 million of it through employee pay and benefit cuts, by the end of September.

Despite weeks of concessions talks, no unions have agreed to such cuts. The mechanics union, one of the carrier's largest groups, said it was opposed to additional pay cuts.

But Jack Stephan, a spokesman for US Airways' pilots union, yesterday said both sides were in the "final stages" of talks. US Airways is seeking about $295 million in cuts from its pilots over a four-year period.

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