
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: SATURDAY, April 15, 1995                   TAG: 9504170072
SECTION: VIRGINIA                    PAGE: A-1   EDITION: METRO 
SOURCE: GREG EDWARDS STAFF WRITER
DATELINE:                                 LENGTH: Medium

USAIR VIABILITY IN DOUBT

USAir Group Inc.'s accounting firm has declared that there is substantial doubt the airline can continue as a going concern, adding pressure to the carrier's efforts to gain $500 million a year in labor concessions.

The statement from the accounting firm KPMG Peat Marwick LPP was contained in a note to shareholders as part of USAir's annual report to the Securities and Exchange Commission. KPMG Peat Marwick said USAir has had recurring losses from operations and has a net capital deficiency.

USAir disagreed with the report. Spokesman Richard M. Weintraub said the airline finished the first quarter with $400 million in cash and, ``barring unforeseen circumstances,'' expects to have a greater cash reserve by the end of the year.

``We do disagree,'' he said. ``They're bound by the rules of accounting, which leaves very little gray-area flexibility,'' he said.

At Roanoke Regional Airport, USAir in March provided 52 percent of the departing flights and 67 percent of available passenger seats of the five airlines serving the field. Mark Courtney, the airport's director of planning and market development, said officials have been keeping close watch on USAir's financial situation through the trade press. Courtney said he was optimistic that the airline will be able to work out its problems.

"I imagine, whatever Peat Marwick may feel, there certainly exists numerous options for USAir," he said.

USAir is the largest carrier serving the airport and the only airline offering jet service from Roanoke. USAir and its affiliated commuter airlines handled almost 500,000 passenger arrivals and departures at the airport last year, nearly five times more than the airport's next busiest carrier, Atlantic Southeast Airlines.

USAir and other U.S. airlines are seeing their revenues improve this spring as ticket pricing has risen from discounts promoted by fierce competition. USAir is attempting to trim costs through labor concessions and operational savings.

Courtney said he doesn't expect USAir's cost cutting to hurt the Roanoke airport. USAir's passenger loads at the airport are "excellent," he said, noting that the airline is increasing the number of seats on its jet flights at Roanoke by 7 percent in May.

Yet, the airport continues to look for a second carrier to provide jet service, Courtney said. The most obvious carrier to do that always has been Delta, he said.

USAir had known for some time that the accountants might refuse to give it a ``going concern'' letter, but had hoped that a March 25 tentative agreement with the Air Line Pilots Association might convince the auditors that sufficient progress was being made in cutting costs.

USAir is attempting to slash $1 billion a year from its expenses, half from labor concessions and half from management economies.

The Washington Post contributed information to this story.

by CNB