US Airways shares hit new low: Market conditions shrinking the value of most airlines

Jul 15, 2008 (The Tribune - McClatchy-Tribune Information Services via COMTEX) -- LCC | Quote | Chart | News | PowerRating -- Shares of Tempe-based US Airways plunged to $1.91 Monday, a mere 3 percent of its post-merger high of $62.95 set in November 2006, a year after America West Airlines and thenbankrupt US Airways combined.

A big write-down and downgrades by a couple of industry watchers may have deepened the slide of the already staggering shares.

Monday's 12 percent drop of 27 cents set a record low since the merger.

In a U.S. Securities and Exchange Commission filing Monday, US Airways said it would write off $622 million of "goodwill" and $18 million of the value of spare airplane parts.

That is not a cash outlay, but a reduction in the value of assets and shareholder equity, said airline spokesman Dan Cravens.

The reduced value is based on a third-party analysis and is caused by high fuel prices and unfavorable general market conditions, Cravens said.

The company also said in the SEC filing to expect more writedowns in future quarters because of already announced capacity reductions and job reductions, and the severance and other costs in making those cuts.

Even before the SEC filing, Fitch Ratings and Wall Street firm Credit Suisse had downgraded US Airways and many of the hometown carriers' competitors. So U.S. airline shares' freefall was nearly industrywide.

AirTran Holdings shares slid 19 percent, Delta, United and American airlines each fell 6 percent, and Continental Airlines dropped more than 7 percent Monday. United's Monday share slide was on top of a 13 percent drop Friday after the carrier announced plans to take a $2.7 billion write-off for goodwill.

American Airlines has also said it will take a charge of $1.1 billion to $1.2 billion in the second quarter to cover the lower value of its fuel-hogging planes. And Continental Airlines said it would take a noncash charge of about $51 million and warned of more write-downs in the third quarter.

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