US Airways has said agents will be able to continue to
book in confidence despite entering Chapter 11 bankruptcy
protection for the second time in as many years.
The airline has struck a deal with Barclays Bank and insurance
company IPP to ensure agents will be financially protected if it
eventually goes bust.
It has placed an undisclosed amount of cash in the bank which
can be accessed by IPP if the airline collapses, to cover
agents’ losses.
The carrier was hit by a drop in sales when it last applied for
Chapter 11 in 2002 because agents and consolidators’ insurers
refused to provide cover for the airline (Travel Weekly August 19
2002).
Travel 4, Flightbookers, Trailfinders and Unijet all suspended
bookings due to a lack of insurance cover.
Under the new arrangement, agents have to be nominated by the
airline and allocated a specified level of business to be covered
by the scheme.
So far 50 of the carrier’s top sellers have been nominated
but only half of the fund has been allocated.
A US Airways spokeswoman said: “Lessons were definitely learnt
last time and we have entered Chapter 11 much better prepared than
in 2002. Other airlines learnt from our experience too.”
IPP has operated a similar scheme with United Airlines since it
went into Chapter 11 last year.
US Airways made history by becoming the first company to enter
bankruptcy protection twice in two years when it filed on Sunday, a
move that has triggered the largest-ever default on a federal loan
guarantee.
The Air Transport Stabilisation Board handed the carrier $900
million to help it emerge from Chapter 11 in April 2003.
The carrier’s move highlights a difficult time for US
airlines. It could be followed by Delta into Chapter 11, while
United’s emergence from bankruptcy protection has been
delayed indefinitely.