Auditor has doubts on USAir
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Your support makes all the difference.Washington (Reuter) - The auditor of USAir Group, the airline in which British Airways has a £260m stake, has expressed doubts about its ability to continue as a going concern.
In response, USAir said it believed it had sufficient liquidity for normal operations and would end the year with more than $400m in cash, barring unanticipated events.
The comments came as a result of a gloomy assessment of the company's prospects by KPMG Peat Marwick, the auditor, disclosed in a note to shareholders attached to USAir's 10K annual report with the Securities and Exchange Commission.
"The group has suffered recurring losses from operations and has a net capital deficiency that raises substantial doubt about its ability to continue as a going concern," KPMG wrote.
In its filing the airline company reiterated that it had not hired bankruptcy counsel, nor did it intend to do so.
The company has not posted a profit since 1989 and has lagged behind other airlines.
Last month it reached a tentative cost-cutting pact with its pilots' union. The agreement is contingent on similiar cost-cutting deals with USAir's other unions.
USAir, which has the highest labour costs of all the main carriers, has repeatedly said its future depends on winning $500m in worker concessions.
Last month, Sir Colin Marshall, chairman of BA, conceded the possibility that the company may have to write down part of the value of its stake in USAir, after months of publicly resisting such a move.
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