A year after a bankruptcy filing made its stock worthless, US Airways is preparing to once again sell shares to the public.
For some, the move connotes the promise of the airline's future as a company. To others, it signifies the betrayal of the owners of the shares wiped out by the bankruptcy.
US Airways filed for bankruptcy protection on Aug. 11, 2002, essentially eliminating 68 million shares of stock that had been worth more than $1 billion a year earlier.
Now, the airline wants to start fresh. A spokesman said it is seeking a listing on a stock exchange, but apparently cannot re-qualify for the New York Stock Exchange because it does not meet listing requirements for new companies.
Among them: Earnings of at least $2 million for each of the two previous years. US Airways lost $1.7 billion in 2002 and $2.1 billion in 2001.
While officials of the Arlington, Va.-based airline won't comment specifically on their plans for a public offering, experts expect the airline to be listed on the Nasdaq stock market by year's end.
Over the past two weeks, US Airways has filed a series of documents with the Securities and Exchange Commission detailing its plans to allocate stock.
The documents show that Retirement Systems of Alabama will get 20 million shares of common stock, about 36.6 percent, as well as 100 percent of Class B stock, which has supervoting rights.
RSA, which lent US Airways money during bankruptcy and invested $240 million afterward, will control the airline. US Airways, once the dominant carrier at Baltimore-Washington International Airport, now has its busiest hub in Charlotte, N.C., where it employs 5,739.
Among individuals, Chief Executive Officer David Siegel will receive the largest allocation: about 1 million shares of common stock, and 720,000 shares of preferred stock, which has a dividend. Although stock is being distributed to most employees, the airline's board has not determined when executives' shares will be vested. Reissuing stock after a company emerges from bankruptcy is a common practice. Under bankruptcy law, common shareholders are often wiped out, while key creditors get stock.
"The old common stockholders are at the bottom of the totem pole," said Gary Ivey, a partner and securities lawyer at Alston & Bird LLP in Charlotte. "The creditors are at the top."
Emerging from bankruptcy and preparing to issue stock are positive steps for a company, putting it "in a position where it can move forward and be successful again," he said. "Some companies go into bankruptcy and don't survive."
Among the benefits: Once its shares are listed and trading, US Airways "will have an easier time tapping into the capital markets," providing an opportunity to raise money by issuing stock.
Some employees questioned the allocation of the new stock, which rewards top management far more than other workers. For instance, most ticket and gate agents will receive about 225 shares each, despite having made major concessions in wages and benefits to keep the airline operating, said James Root, president of Local 3641 of the Communications Workers of America.
"It's not a surprise to me," Root said. "It's always been the case that the rich get richer."
Added Roy Freundlich, spokesman for the US Airways chapter of the Air Line Pilots Association: "Ever since the senior officers got here, they've been in the business of taking care of themselves."
Many US Airways workers held the airline's stock in their retirement accounts - and lost thousands of dollars when it was devalued. But unlike some 401(k) retirement accounts, the US Airways accounts allowed employees to sell the stock when they chose, a spokesman said.