UAL Update: Hmmmm?

[A1FlyBoy]

United Said Consulting with Bankruptcy Lawyer
Updated 11:17 AM ET February 18, 2002

NEW YORK (Reuters) - UAL Corp.'s (UAL.N) United Airlines is in consultations with the head of its law firm's bankruptcy practice, Crain's Chicago Business reported on Monday, as the airline faces a potentially crippling strike.

Crain's reported that as part of United's contingency planning the company has begun consulting with bankruptcy attorney James Sprayregen, citing unnamed sources familiar with the situation.

Sprayregen, of UAL's longtime law firm, Chicago-based Kirkland & Ellis, was lead counsel for Trans World Airlines in its bankruptcy and sale last year, Crain's reported.

Asked about the Crain's report, a UAL spokesman told Reuters, ``We have hired no new counsel,'' but declined further comment.

Sprayregen and Kirkland & Ellis were not immediately available for comment.

United is facing a looming strike by 13,000 mechanics and cleaners, with a deadline on Tuesday. Some analysts have suggested that a strike could force the company into filing for bankruptcy protection.

The airline posted a net loss of $2.1 billion in 2001, an industry record

This doesn't sound to good. Could be to scare the mechanics. Who Knows?

 

[generaltso]

Yes this was a scare tactic, but it is not needed since UAL and the IAM settled today. Hopefully, this will delay bankruptcy for a few more months.

 

[publisher]

filing

Not a scare tactic nor does the settlement with the mechanics mean much...... Concessions not given they will be filing.

 

[TurboS7]

Look hard at their numbers and you will find that they may go under Chapter 11 even without the mechanic strike.

 

[Daysoff]

I do not believe they have settled yet. It is a tentative agreement which must still be ratified by the union. Even if they do agree to the contract, UAL is by no means out of the water and I am real curios to see what kind of concessions the CEO is looking for from all the labor groups, but mostly the pilots. I certainly hope that they are able to avoid Ch. 11, it will be bad for all the other carriers also.

 

[TurboS7]

In reality Chapter 11 could be a good thing for them, it sure would help increase their cash flow and get them out of some nasty leases. Since 911 their isn't that stigma with Ch11 that there has been in the past. They may not even have to furlough and if their plan is sound they could even expand through their bankrupcy.

 

[TWA Dude]

If UA should choose to go Chapter 11 then the other majors would be forced to follow in order to keep up with UA's reduced operating costs. It would be a huge mess and the government might be forced to step in, heaven forbid.

 

[publisher]

ludicrous

Think about this situation...... We have United Airlines, supposedly one of the largest, strongest, and best airlines on the world. They sit there and say that they want the pilots and mechanics to have the best contracts in the world.

But:

They are bleeding like a stuck pig at a barbeque. They are in dire need of concessions which of course means that those best contracts will not be. They cannot stand a strike because then they would not have any customers either and no airline. Without the government bailout, they would not exist now.

Then:

They will need no pilots or mechanics. The public will have wasted its money, and, the other carriers will get stronger.

What is wrong with this picture.

 

[skykid]

What is your point, publisher?

 

[TurboS7]

We can always go back to the CAB the ORS and divide the country into little airline kingdoms. Of course SWA would have to go back to their DAL-HOU-DAL run, and that's all.

 

[publisher]

b movie

I just find this to be a bit ironic.

We are going to give you a raise we cannot afford to give so that we can get the concession part underway that we desparately need and we, the public, are paying for this.

 

[skykid]

Publisher, I have to agree and disagree with your assesment of the government bailout. As far as limiting the liability of AMR and UAL, the bailout saved the entire industry. No carrier could afford to carry the kind of insurance that would be needed to cover what happened. It would have been interesting to see how anybody was at fault and what laws/regulations the terrorists broke before they took over those planes, but the gov didn't want to give the trial lawyers a chance. As far as the cash part of the bailout, UAL would have about 1.5 bil right now if they hadn't received any cash, and AMR would have even more. Plus 4 bil in assets. Saying UAL wouldn't exist is dramatic, but not factual. You have something against UAL - I couldn't care less. People in the industry with sense aren't wishing CH11 on anybody. Want to wish for something - hope the economy gets better quickly and the industry recovers, including the high paying jobs that some people out there might eventually like to have.

 

[kilomike]

Well said, skykid!!

 

[publisher]

Perhaps I should have been clearer. Exist from the standpoint that we perceive it.

The point here being that had not the public funds been infused into the industry, and I want you to know that I certainly thought they needed to do that, United probably would have gone to Chapter 11 right away.

They had the unfortunate situation where they had become involved in a failed merger, lost considerable marketshare during the slowdown, and, signed a very costly labor agreement.

What I am saying is that if they do not get substantial concessions from labor and vendors, Chapter 11 is likely and I personally think that it will be a major blow and what may come out in the end will not resemble the United that went in.

I sort of wonder what would have happened without the bailout. Had Airways and America West failed, American and United may have emerged stronger. I really do not know. We are six months into this thing and have only improved a very small distance in terms of capacity and loads.

 

[skykid]

Good points publisher. I also think its interesting that we are six months into this and all the dire predictions have yet to come true. Last Sep and Oct all we heard was about how many airlines were likely to fail, things will never be the same, and so on. Well, all we need is the economy to pick up and I'm not sure any others will fail. A wise Captain once told me - things are never as good, or as bad, as they might seem in the airline industry. I fly with an amazing amount of ex Eastern and PanAm guys who made good money with those companies, and are making good money now. The name on the side of the plane changed, but the lift didn't go away.