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Deadline for UAL... Maybe

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dashtrasher

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Deadline for UAL

United Airlines sets June 30 to emerge from bankruptcy
By David Kesmodel, Rocky Mountain News
January 7, 2004

More than a year into the airline industry's biggest bankruptcy, United Airlines has finally set a firm date by which it aims to emerge from Chapter 11: June 30.
The giant carrier has said that it was targeting mid-2004. But its executives also projected at one point it would emerge as soon as last year's fourth quarter, and United had never asserted a precise month and day as a deadline.

The June 30 date showed up in documents Denver's dominant carrier filed last week in U.S. Bankruptcy Court in Chicago.
United and the banks that agreed to underwrite $2 billion in loans to help it exit bankruptcy - J.P. Morgan Chase & Co. and Citigroup Inc. - set the deadline. The banks made their loans contingent on United getting $1.6 billion in U.S. loan guarantees and having its reorganization plan approved by a bankruptcy judge on or before June 30.
Several analysts said Tuesday the deadline was important because it would force United to quickly resolve outstanding disputes with various suppliers and partners and address shortcomings in its strategy.
"It lends a sense of urgency to the proceedings," said Stuart Klaskin, a principal at KKC Aviation Consulting in Miami. "You don't want to be flopping around absent a target deadline. Unfortunately, people and institutions tend to follow human nature and don't want to make decisions until they have to."
Some analysts have criticized United for dragging its feet during bankruptcy, stressing that its marketing partner, US Airways, was quick to set a March 31, 2003, target for emerging from its own bankruptcy. US Airways met its goal after an eight-month proceeding, although some analysts fear its restructuring was incomplete.
With a deadline in place, Chicago-based United "is being told to get the house in order, to make that final push to the finish line," said Bob Mann, an industry consultant in Port Washington, N.Y.
The date also puts pressure on the Air Transportation Stabilization Board "to put up or shut up" about United's request for loan guarantees, which was filed last month, he said.
United spokeswoman Jean Medina declined to comment on the possible timing of a decision by the board. The board in late 2002 rejected the airline's first request for loan guarantees after a roughly six- month evaluation, calling United's business plan financially unsound. The move forced parent UAL Corp. to file for Chapter 11.
The carrier said its latest application addresses the weaknesses of the first business plan.
United has overhauled its cost structure by winning $2.56 billion in annual wage and benefit concessions from labor groups and shaving hundreds of millions of dollars in annual aircraft payments.
It also has enjoyed an uptick in revenue for each seat flown a mile. It turned its first operating profit in three years during the 2003 third quarter.
The airline, through various initiatives, continues to seek help from the U.S. government to resolve its deep pension deficit. United wants to stretch $2.4 billion in required contributions to its pension plans over five years, instead of the normal 20-month funding schedule.
The company also needs to find a way to replace commuter service by partner Atlantic Coast Airlines on the East Coast. Atlantic Coast has said it will break ties with United and become an independent airline.
Analysts said United should be able to meet the June 30 deadline.
"Everything is doable," said Ray Neidl, an analyst with Blaylock & Partners in New York. "The pension is the big question."
Neidl said he projects an industry recovery this spring, and "it's always helpful to exit bankruptcy in an up environment."
Douglas Baird, who teaches bankruptcy law at the University of Chicago, said he didn't view the setting of a firm deadline as significant.
The question for United is not how long it will be in Chapter 11 but whether it can return to long-term health after bankruptcy, he said. "The answer is, 'We don't know.' "
United's labor unions had mixed reactions to the deadline.
Joe Tiberi, spokesman for the Machinists, which represents United's ticket agents, said he thought the June 30 deadline was all but set in stone by the airline previously.
"My understanding is that's the date they've said they want to emerge," he said. "We look forward to United exiting bankruptcy, but we realize that it's more important that the airline emerge in a position to return to profitability."
O.V. Delle-Femine, director of the Aircraft Mechanics Fraternal Association, representing United's mechanics, said he was surprised by the move but thinks "United is doing a lot better" financially.
Pilots union spokesman Dave Kelly declined comment, saying the union hadn't had a chance to study Friday's court filing.
United made the filing to seek Judge Eugene Wedoff's approval of the $2 billion loan agreement and related bank fees. The filing also said United would give the U.S. government an unspecified number of warrants to buy its stock in exchange for the loan guarantees.
The carrier is pledging overseas routes, aircraft, buildings and other property as collateral for the loan. The loan would have to be repaid within seven years.
 
I am expecting a response from Ty Webb any minute now....


Bye Bye--General Lee;) :rolleyes: :D
 

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