USAir Defers Preferred Dividend

NEW YORK â€”  USAir Group Inc., facing large losses and fallout after two major plane crashes this year, said Thursday that it will defer its quarterly dividend payment, due today, on $358 million of its preferred stock.

The postponement, less drastic than an outright suspension, defers payments on preferred shares held by two of its major investors, British Airways and the Berkshire Hathaway Inc. investment group, led by billionaire Warren Buffett.

British Airways said it is due $25 million in annual dividend payments from its near-25% stake in USAir. It said the effect of USAir’s decision will be to defer quarterly dividend payments on the two classes of stock it holds.

USAir stock tumbled $1, or 20%, to $4 a share Thursday on the New York Stock Exchange. British Airways stock dropped $2 to $55 in late NYSE trading.

The USAir decision “increases fears that (British Airways) may have to write off their investment in USAir,� London-based BZW analyst Nick Cunningham said.

USAir, which did not set a date for when it will pay the dividend, has predicted losses of more than $350 million for 1994. Analysts said the magnitude of the expected losses was an obvious factor in USAir’s decision not to make its payments.

Compounding the carrier’s financial troubles have been two recent fatal crashes. The first occurred in Charlotte, N.C., on July 2, killing 37 people. In the second, 132 people died near Pittsburgh on Sept. 8.

USAir is also involved in protracted talks with its labor unions, seeking ways to cut costs.

The dividend move “is a signal to me that progress in labor talks is not going as well as I had hoped,� said Glenn Engel, airline analyst for Goldman Sachs & Co.