US Airways has filed for bankruptcy protection after failing to get unions to sign up to a cost-cutting deal.
Bankruptcy court proceedings begin later today after the seventh-largest US carrier sought Chapter 11 protection from creditors during the weekend. It is the second time in two years that the airline has sought such protection.
Soaring fuel costs and weak sales amid ferocious competition from low-cost rivals such as Southwest Airlines are at the root of its problems. It has failed in a bid to secure cost-concessions from labor unions, some of which are also key shareholders.
"There is only one way for the company to emerge from Chapter 11, and that involves lower costs, including lower labor costs," said Mr David Bronner, the airline's chairman and chief executive of the Alabama pension fund that is its biggest shareholder.
The company will argue its case before the same judge, Mr Stephen Mitchell, who approved the airline's initial restructuring in March 2003.
US Airways was the first big US carrier to enter bankruptcy during the industry's worst downturn, accelerated by the September 11th, 2001, hijack attacks. It filed its first bankruptcy petition in August 2002, followed months later by industry number two United Airlines, which is still under protection from creditors.
Delta Air Lines, the third-largest US carrier, is also fighting to avert a filing.