sassa Posted December 10 Report Share Posted December 10 United files for bankruptcy CHICAGO, Dec. 9 — United Airlines made the largest bankruptcy filing in aviation history Monday, saying it was the only way to keep the world’s No. 2 airline flying after two years of heavy losses. The Chapter 11 filing was the sixth-largest ever as measured by assets. The suburban Chicago-based company has lost $4 billion in the last two years due to a slumping economy, flawed business strategies and the Sept. 11 terrorist attacks. It faced debt payments of $875 million later this week. “WE’RE IN CONTROL of United’s destiny,” United CEO Glenn Tilton said in a telephone interview. “We’ve made a good decision for United. It is in fact Chapter 1. ... This is a tremendous opportunity for United to transform this company and to emerge stronger than ever.” Tilton told customers and employees at O’Hare International Airport that the carrier would keep flying. “We are now going to take this occasion to create a new beginning for United,” he said. Tilton said he expects the bankruptcy process to be completed within 18 months. At a bankruptcy hearing at 7 a.m., Chief Judge Eugene R. Wedoff issued orders allowing United to keep operating until another hearing Monday when he is to issue further orders allowing the airline to continue its operations. The bankruptcy of United Airlines, the world’s No. 2 carrier, is by far the biggest in airline history. Below is a list of the top 10 bankruptcy filings by airlines in the U.S. ranked by assets. Company Start Assets UAL Corp.̵ng was the sixth-largest ever as measured by assets. The suburban Chicago-based company has lost $4 billion in the last two years due to a slumping economy, flawed business strategies and the Sept. 11 terrorist attacks. It faced debt payments of $875 million later this week. “WE’RE IN CONTROL of United’s destiny,” United CEO Glenn Tilton said in a telephone interview. “We’ve made a good decision for United. It is in fact Chapter 1. ... This is a tremendous opportunity for United to transform this company and to emerge stronger than ever.” Tilton told customers and employees at O’Hare International Airport that the carrier would keep flying. “We are now going to take this occasion to create a new beginning for United,” he said. Tilton said he expects the bankruptcy process to be completed within 18 months. At a bankruptcy hearing at 7 a.m., Chief Judge Eugene R. Wedoff issued orders allowing United to keep operating until another hearing Monday when he is to issue further orders allowing the airline to continue its operations. The bankruptcy of United Airlines, the world’s No. 2 carrier, is by far the biggest in airline history. Below is a list of the top 10 bankruptcy filings by airlines in the U.S. ranked by assets. Company Start Assets UAL Corp.’s United Air Lines 12/09/02 $22,800,000,000 U.S. Airways, Inc. 8/11/02 $8,025,000,000 Continental Airlines Holdings 12/3/90 $7,656,140,000 Eastern Air Lines, Inc. 3/9/89 $4,037,000,000 Trans World Airlines, Inc. 1/31/92 $2,864,530,000 Trans World Airlines, Inc. 6/30/95 $2,495,210,000 Pan Am Corp. 1/8/91 $2,440,830,000 Trans World Airlines, Inc. 1/10/01 $2,137,180,000 America West Airlines 6/27/91 $1,165,260,000 Resorts International 11/12/89 $1,034,580,000 United said it obtained $1.5 billion in financing from several banks to continue operating. The airline said it has $800 million cash on hand. James Sprayregen, an attorney for United, told Wedoff that the company was losing between $20 million and $22 million a day this month and desperately needed to cut costs. The company and a coalition of union leaders were scheduled to meet Tuesday to begin talks about reducing costs. The airline has promised to keep flying while it sheds costs under the auspices of a bankruptcy judge and overhauls its business plan to try to become profitable again. As of Monday’s filing, United had assets of $22.8 billion and liabilities of $21.2 billion, the company said. United operates about 1,700 flights a day, or about 20 percent of all U.S. flights. It has the most extensive worldwide route structure 7;s United Air Lines 12/09/02 $22,800,000,000 U.S. Airways, Inc. 8/11/02 $8,025,000,000 Continental Airlines Holdings 12/3/90 $7,656,140,000 Eastern Air Lines, Inc. 3/9/89 $4,037,000,000 Trans World Airlines, Inc. 1/31/92 $2,864,530,000 Trans World Airlines, Inc. 6/30/95 $2,495,210,000 Pan Am Corp. 1/8/91 $2,440,830,000 Trans World Airlines, Inc. 1/10/01 $2,137,180,000 America West Airlines 6/27/91 $1,165,260,000 Resorts International 11/12/89 $1,034,580,000 United said it obtained $1.5 billion in financing from several banks to continue operating. The airline said it has $800 million cash on hand. James Sprayregen, an attorney for United, told Wedoff that the company was losing between $20 million and $22 million a day this month and desperately needed to cut costs. The company and a coalition of union leaders were scheduled to meet Tuesday to begin talks about reducing costs. The airline has promised to keep flying while it sheds costs under the auspices of a bankruptcy judge and overhauls its business plan to try to become profitable again. As of Monday’s filing, United had assets of $22.8 billion and liabilities of $21.2 billion, the company said. United operates about 1,700 flights a day, or about 20 percent of all U.S. flights. It has the most extensive worldwide route structure of any airline. --------------------------------------------------------------------------------United Airlines expects business as usual on all fronts in the short term, despite its bankruptcy filing. Click on an item above to see how United’s bankruptcy impacts you. --------------------------------------------------------------------------------Frequent fliers: United’s popular Mileage Plus program should not be affected. If the reorganization fails and the carrier ceases business the airline would likely be bought by another carrier and its mileage program — a valuable customer base — assumed, experts believe. There is no absolute guarantee, however. When Australia’s Ansett went under the mileage program simply folded. United spokesman Chris Braithwaite said the company believes it would be “business as usual” for all aspects of its operations, including the mileage program.--------------------------------------------------------------------------------Service: The 180,000 passengers who fly United each day should see no service interruptions or changes in the near term, experts believe. Eric Henderson, vice president for global supplier relations at Rosenbluth International, a major travel management company,of any airline. --------------------------------------------------------------------------------United Airlines expects business as usual on all fronts in the short term, despite its bankruptcy filing. Click on an item above to see how United’s bankruptcy impacts you. --------------------------------------------------------------------------------Frequent fliers: United’s popular Mileage Plus program should not be affected. If the reorganization fails and the carrier ceases business the airline would likely be bought by another carrier and its mileage program — a valuable customer base — assumed, experts believe. There is no absolute guarantee, however. When Australia’s Ansett went under the mileage program simply folded. United spokesman Chris Braithwaite said the company believes it would be “business as usual” for all aspects of its operations, including the mileage program.--------------------------------------------------------------------------------Service: The 180,000 passengers who fly United each day should see no service interruptions or changes in the near term, experts believe. Eric Henderson, vice president for global supplier relations at Rosenbluth International, a major travel management company, says it should be a “nonevent” for passengers.--------------------------------------------------------------------------------Routes: There will be no immediate change in schedules or routes. As the reorganization progresses there could at some point be cuts or other revisions, with advance notice, but not in the short term.--------------------------------------------------------------------------------History: The Chapter 11 bankruptcy of USAirways on Aug. 11 offers insights into what would likely happen in the near term at United, which operates 1,800 flights daily over a global network. USAirways schedules were not affected in the days after its filing though there were cutbacks in service later on.--------------------------------------------------------------------------------Future: A historic problem with airline bankruptcies has been worry by passengers about whether to book flights far into the future. David Stempler, president of the Air Travelers Association, says United will not have that problem because the traveling public is more sophisticated now and understands what happens in a bankruptcy. “United is so big and has such a strong brand recognition, that I think people will be convinced that they will be around for the long haul,” he said.A historic problem with airline bankruptcies has been wor says it should be a “nonevent” for passengers.--------------------------------------------------------------------------------Routes: There will be no immediate change in schedules or routes. As the reorganization progresses there could at some point be cuts or other revisions, with advance notice, but not in the short term.--------------------------------------------------------------------------------History: The Chapter 11 bankruptcy of USAirways on Aug. 11 offers insights into what would likely happen in the near term at United, which operates 1,800 flights daily over a global network. USAirways schedules were not affected in the days after its filing though there were cutbacks in service later on.--------------------------------------------------------------------------------Future: A historic problem with airline bankruptcies has been worry by passengers about whether to book flights far into the future. David Stempler, president of the Air Travelers Association, says United will not have that problem because the traveling public is more sophisticated now and understands what happens in a bankruptcy. “United is so big and has such a strong brand recognition, that I think people will be convinced that they will be around for the long haul,” he said.A historic problem with airline bankruptcies has been worry by passengers about whether to book flights far into the future. But in its statement Monday, United tried to reassure travelers. “UAL stressed that it is business as usual and that current and future tickets on United flights will be honored.” David Stempler, president of the Air Travelers Association, said United should not have a major problem with booking in the short term because the traveling public is more sophisticated now and understands what happens in a bankruptcy. “United is so big and has such a strong brand recognition, that I think people will be convinced that they will be around for the long haul,” he said. The bankruptcy filing will come at a steep price for the 83,000 employees who own 55 percent of the company. A bankruptcy court judge is almost certain to order wage and job cuts and could dissolve the employee stock ownership plan. Two of United’s unions, the Air Line Pilots Association and the Association of Flight Attendants, said both sides must work together during restructuring. “Any successful restructuring of United in bankruptcy must involve continued cooperation and collaboration among ALPA, United management and all of the company’s labor unions,” the pilots’ union said. We look forward to those discussions.” The carrier’s stock, whiry by passengers about whether to book flights far into the future. But in its statement Monday, United tried to reassure travelers. “UAL stressed that it is business as usual and that current and future tickets on United flights will be honored.” David Stempler, president of the Air Travelers Association, said United should not have a major problem with booking in the short term because the traveling public is more sophisticated now and understands what happens in a bankruptcy. “United is so big and has such a strong brand recognition, that I think people will be convinced that they will be around for the long haul,” he said. The bankruptcy filing will come at a steep price for the 83,000 employees who own 55 percent of the company. A bankruptcy court judge is almost certain to order wage and job cuts and could dissolve the employee stock ownership plan. Two of United’s unions, the Air Line Pilots Association and the Association of Flight Attendants, said both sides must work together during restructuring. “Any successful restructuring of United in bankruptcy must involve continued cooperation and collaboration among ALPA, United management and all of the company’s labor unions,” the pilots’ union said. We look forward to those discussions.” The carrier’s stock, which reached $100 a share in 1997, rose 10 cents to $1.03 a share in afternoon trading on the New York Stock Exchange Monday. The bankruptcy restructuring also is likely to result in fewer flights. Experts say frequent-flier miles and basic fare levels are likely to be retained for the short term, although fare hikes are likely over the longer haul. A spokesman for United’s pilots union urged passengers Sunday not to abandon the airline during a bankruptcy filing. “This is going to be painful for the stockholders and the employees, but the airline’s going to keep flying and we’re going to come out of this stronger,” pilot Herb Hunter said. “The passengers shouldn’t notice any difference.” Airline consultant Robert Mann said the company will have to keep the morale of United’s workers from falling too low. Advertisement “It’s certainly demoralizing to employees, and the risk is that it will somehow translate into less friendly service - in effect getting customers in the middle of an emotional problem,” said Mann, of R.W. Mann & Co. in Port Washington, N.Y. On pace to lose an industry-record $2.5 billion this year, United had pinned its last hopes of avoiding bankruptcy on getting federal backing for $1.8 billion of a $2 billch reached $100 a share in 1997, rose 10 cents to $1.03 a share in afternoon trading on the New York Stock Exchange Monday. The bankruptcy restructuring also is likely to result in fewer flights. Experts say frequent-flier miles and basic fare levels are likely to be retained for the short term, although fare hikes are likely over the longer haul. A spokesman for United’s pilots union urged passengers Sunday not to abandon the airline during a bankruptcy filing. “This is going to be painful for the stockholders and the employees, but the airline’s going to keep flying and we’re going to come out of this stronger,” pilot Herb Hunter said. “The passengers shouldn’t notice any difference.” Airline consultant Robert Mann said the company will have to keep the morale of United’s workers from falling too low. Advertisement “It’s certainly demoralizing to employees, and the risk is that it will somehow translate into less friendly service - in effect getting customers in the middle of an emotional problem,” said Mann, of R.W. Mann & Co. in Port Washington, N.Y. On pace to lose an industry-record $2.5 billion this year, United had pinned its last hopes of avoiding bankruptcy on getting federal backing for $1.8 billion of a $2 billion loan that banks wouldn’t otherwise provide. But the Air Transportation Stabilization Board, created last year to help the airline industry recover after Sept. 11, rejected United’s request on Wednesday. White House spokesman Ari Fleischer declined to comment on the bankruptcy filing. Fleischer said the Bush administration would not second-guess the stabilization board’s decision. The linchpin to United’s proposal was $5.2 billion in labor cutbacks by 2008, but the three-member federal panel said the airline’s business plan was financially unsound and a loan guarantee would have risked U.S. taxpayers picking up the tab. United has struggled even more than other airlines during the industry’s worst-ever slump. The carrier already had lost about $1 billion since mid-2000 by the time of the attacks because of labor turmoil, the industry’s highest costs and several failed strategies, including a costly and time-consuming bid to acquire US Airways - itself now in Chapter 11 bankruptcy. United cut service and laid off nearly 20,000 workers after the terrorist attacks, but it hasn’t come close to making up for revenue lost from the drop-off in business travel. United’s filing dwarfs all other airline bankruptcies. The previous largest was by Continental Airlines in 1990.ion loan that banks wouldn’t otherwise provide. But the Air Transportation Stabilization Board, created last year to help the airline industry recover after Sept. 11, rejected United’s request on Wednesday. White House spokesman Ari Fleischer declined to comment on the bankruptcy filing. Fleischer said the Bush administration would not second-guess the stabilization board’s decision. The linchpin to United’s proposal was $5.2 billion in labor cutbacks by 2008, but the three-member federal panel said the airline’s business plan was financially unsound and a loan guarantee would have risked U.S. taxpayers picking up the tab. United has struggled even more than other airlines during the industry’s worst-ever slump. The carrier already had lost about $1 billion since mid-2000 by the time of the attacks because of labor turmoil, the industry’s highest costs and several failed strategies, including a costly and time-consuming bid to acquire US Airways - itself now in Chapter 11 bankruptcy. United cut service and laid off nearly 20,000 workers after the terrorist attacks, but it hasn’t come close to making up for revenue lost from the drop-off in business travel. United’s filing dwarfs all other airline bankruptcies. The previous largest was by Continental Airlines in 1990. It is the 11th time a major U.S. airline has filed for bankruptcy since deregulation in 1978, including TWA three times. Quote Link to comment Share on other sites More sharing options...
gordongecko Posted December 10 Report Share Posted December 10 Well Bankcruptcy doesnt mean its the end for United, take for instance Macy's they filed for chapter 11 and managed to bounce back. Filing for bankruptcy helps u re- structure and protects u against creditors who want there money. Quote Link to comment Share on other sites More sharing options...
bigpoppanils Posted December 12 Report Share Posted December 12 good....i'm so happy the gov't didnt guarantee their debts.... Quote Link to comment Share on other sites More sharing options...
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