BRONNER THINKS AIRLINES LIKELY TO SURVIVE

By Luisa Beltran
Mar 18, 2003

MONTGOMERY, Ala. (CBS.MW) -- David Bronner, the Alabama public pension chief who's
expected to take control of bankrupt US Airways Group Inc., believes airlines are a
good bet.

A war with Iraq will likely have a severe effect on the airline industry, though
Bronner hopes any drop in airline traffic will be temporary and in the end equate to
no worse than a winter storm lasting three to five days.

"The world is tough right now, and it's tough on airlines," Bronner said in an
interview with CBS.MarketWatch.com. "But the sun will rise sometime in the East and
we will get through this."

Bronner has made sure US Airways stands poised to survive the war. The airline's
nearly 35,000 active employees have already agreed to defer 5 percent of their pay
for up to 18 months if there is a war.

In turn, US Airways will reimburse the workers when it reports its first profitable
quarter or at the end of the 18 months.

But US Airways management has discretion to decide when and whether to impose the
deferment, spokesman David Castelveter said. "US Airways has not cancelled any
flights, but we do have contingency plans to take into consideration," he said.

The airline sector continues to reel from the terrorist attack over a year ago.
Arlington, Va.-based US Airways filed for Chapter 11 last August -- the first major
U.S. carrier to seek bankruptcy protection since Sept. 11.

United Airlines, a unit of UAL Corp. , has since gone bankrupt and has cut about 20
percent of its work force since the terrorist attack.

American Airlines, the world's largest airline and a subsidiary of AMR Corp. , risks
filing Chapter 11 if it fails to cut labor costs -- a prospect that has served to
severely undercut the price of AMR shares lately.

But AMR surged on Tuesday, adding 11 cents, or 6.7 percent, to stand lately at $1.75.

Speculators, meanwhile, continue to trade in the shares of US Airways and UAL. UAL
dropped 1 cent to change hands at 85 cents, while US Airways lost a penny to 10
cents.

Taking control at US Airways

The airline industry is trying to work through the vexing problems of overcapacity
and high fixed costs for labor and fuel -- difficulties exacerbated by a falloff in
the number of travelers willing to fly at a time of terrorism and war worries.

But Bronner thinks the airlines will survive, since they are an important aspect of
everyday society.

"Airlines are an important ingredient of our life," Bronner said. "I give the
airlines, the whole industry, one to two years to play out."

Last September, the Retirement Systems of Alabama beat out Texas Pacific Group to
invest $240 million in US Airways and acquire a 37.5 percent stake. The investment
made the state pension fund the largest shareholder in US Airways. See full story.

Bronner, as RSA's head, is expected to be named chairman of the nation's
seventh-largest airline when it emerges from bankruptcy.

US Airways has submitted a 15-member board to the U.S. bankruptcy court in
Alexandria overseeing its Chapter 11 proceeding. Bronner and the pension fund's
general counsel are included on the slate.

Six other spots are also controlled by RSA. When asked whether he will become
chairman, Bronner quipped: "Well, if you get eight votes, sometimes you can manage
that."

The bankruptcy court is also considering the carrier's proposed reorganization plan,
which won approval from more than 80 percent of the company's creditors. Bankruptcy
Judge Stephen Mitchell is holding a three-day hearing beginning Tuesday on the
reorganization plan.

Bronner expects the bankruptcy court to approve the plan sometime this week.
But the RSA head said that he doesn't plan to "make a career" heading US Airways and
that he’s made a commitment of a year or two.

"We want to make sure that the board supports the US Airways staff in getting into a
position that is functional and viable," he said.

If all goes according to plan, US Airways will likely emerge from bankruptcy by the
end of this month or early April, Bronner said.