Judge ruling
Cocknbull, re: the judge. Note the next date of February 24. If I know lawyers they are going to delay as much as possible to get as much money as possible. The longer they are retained, the more money they get. The following from CBS newswire
Bankrupt UAL Corp., parent of United Airlines, said in a Thursday bankruptcy hearing it will pay $128 million in deferred lease payments on just over a quarter of its aircraft that were eligible for a 60-day grace period that's come to an end.
The bankrupt No. 2 airline was also granted a stay until Feb. 21 on two key issues relating to the State Street (STT: news, chart, profile) managed employee stock ownership plan's ability to sell company shares and objections by the flight attendant's union over executive compensation.
Atlantic Coast Airlines' (ACAI: news, chart, profile) was also granted a motion to formalize a Feb. 24 hearing on its relationship with United.
Judge Eugene Wedoff, who presides over the U.S. Bankruptcy Court of the Northern District of Illinois, approved United's decision to offer to pay aircraft lease holders less money in a move to cut costs. Some leases will also likely be broken as United streamlines its fleet.
Just what those new terms are won't be public after Wedoff granted United the ability to seal the new terms over the objections of aircraft owners who want the information made public.
"That strikes me as not an uncommon situation in the marketplace," Judge Wedoff said.
United said in the bankruptcy court hearing that it had 463 aircraft eligible for the postponed payments, permitted under the bankruptcy code. It will pay catch-up payments on 154 of the aircraft, most of which are the newer jets in its fleet. United owns 95 of its total 567 total aircraft.
For the leasing companies, the prospect of taking back more aircraft is unappealing when the number of jets parked out of circulation already is so high.
The airline is making arrangements with the rest of its lease holders as it fine tunes its restructuring plan.
At day's end, UAL (UAL: news, chart, profile) gave up 8 cents to $1.02.
On Wednesday, United rallied after that followed the latest information about the company's turnaround plan. See full story.
So far, bookings remain strong, said CFO Jake Brace. "Our cash situation has been quite good, as well," he said outside the hearing. Wage reductions, which have cut costs by $70 million a month, and the stronger bookings have helped keep the cash situation ahead of terms of United's debtor-in-possession financing.
Speaking of the proposed low-cost airline, Brace offered few details about how United might structure its routes. "In any event, we're not going to compete with ourselves," he said.
The next hearing is scheduled for Feb. 21. See Judge Wedoff's calendar.
Separately, there were no representatives from an ad-hoc creditors committee that had recently formed alongside the group created by the U.S. Trustee. Various lawyers said they believed the group had disbanded.
August Cole is spot news editor at CBS.MarketWatch.com in Chicago
