WatchYourElbows
Well-known member
- Joined
- Oct 2, 2003
- Posts
- 79
United Airlines' Parent Company Ends Wrangle Over Renegotiated Aircraft Leases
CHICAGO (AP) -- United Airlines' parent company said Tuesday it has resolved a contentious dispute over renegotiated aircraft leases involving about a quarter of its fleet, moving the nation's second-largest carrier a step closer to exiting bankruptcy.
UAL Corp. announced an agreement with a group of finance companies that settles the leases for 105 of its 455 jets, with a transaction pending on the remaining 14 aircraft.
The agreement, which United said was reached Saturday, ends a protracted fight over the aircraft and essentially removes the threat they could be repossessed. The newly lowered rates also will cut its costs by $300 million annually, pushing to about $850 million the total in reduced yearly fleet expenses since it began its bankruptcy overhaul in December 2002.
"This agreement, if approved by the bankruptcy court, overcomes one of the last remaining hurdles in United's restructuring and upcoming emergence from Chapter 11," said Jake Brace, chief financial officer for the Elk Grove Village, Ill.-based company.
The airline had reached an agreement in principle with the planes' lessors last summer but subsequently nixed the deal, citing ever-rising fuel prices and the need for further cost reductions due to difficult conditions in the airline industry.
A rebound in the market for leased jets made it tougher for United to secure the terms it wanted, and a May court ruling by the U.S. 7th Circuit Court of Appeals cleared the way for lessors for take back dozens of planes unless United paid its rent in full at the original lease rates. The airline returned four Boeing 767s to leasing companies soon afterward but was able to avoid losing more for the key summer travel season.
The company said it intends to file a motion requesting approval of the agreement in the next couple of weeks, with a hearing expected in early to mid-September.
Still left to resolve in bankruptcy are filing a long-delayed business plan and obtaining $2 billion to $2.5 billion in loans. In announcing the latest delay on Aug. 2, United said it expected to file a business plan in about a month and is now targeting late this year or early 2006 for leaving bankruptcy.
United has lost more than $2.5 billion this year and over $7 billion since entering bankruptcy. It hasn't made a profit in more than five years.
CHICAGO (AP) -- United Airlines' parent company said Tuesday it has resolved a contentious dispute over renegotiated aircraft leases involving about a quarter of its fleet, moving the nation's second-largest carrier a step closer to exiting bankruptcy.
UAL Corp. announced an agreement with a group of finance companies that settles the leases for 105 of its 455 jets, with a transaction pending on the remaining 14 aircraft.
The agreement, which United said was reached Saturday, ends a protracted fight over the aircraft and essentially removes the threat they could be repossessed. The newly lowered rates also will cut its costs by $300 million annually, pushing to about $850 million the total in reduced yearly fleet expenses since it began its bankruptcy overhaul in December 2002.
"This agreement, if approved by the bankruptcy court, overcomes one of the last remaining hurdles in United's restructuring and upcoming emergence from Chapter 11," said Jake Brace, chief financial officer for the Elk Grove Village, Ill.-based company.
The airline had reached an agreement in principle with the planes' lessors last summer but subsequently nixed the deal, citing ever-rising fuel prices and the need for further cost reductions due to difficult conditions in the airline industry.
A rebound in the market for leased jets made it tougher for United to secure the terms it wanted, and a May court ruling by the U.S. 7th Circuit Court of Appeals cleared the way for lessors for take back dozens of planes unless United paid its rent in full at the original lease rates. The airline returned four Boeing 767s to leasing companies soon afterward but was able to avoid losing more for the key summer travel season.
The company said it intends to file a motion requesting approval of the agreement in the next couple of weeks, with a hearing expected in early to mid-September.
Still left to resolve in bankruptcy are filing a long-delayed business plan and obtaining $2 billion to $2.5 billion in loans. In announcing the latest delay on Aug. 2, United said it expected to file a business plan in about a month and is now targeting late this year or early 2006 for leaving bankruptcy.
United has lost more than $2.5 billion this year and over $7 billion since entering bankruptcy. It hasn't made a profit in more than five years.