Favor Continued Support of Industry Overcapacity

The Official Committee of Unsecured Creditors of UAL and United Airlines delivered the following letter to the White House and Congressional Leadership, urging swift government action on airline industry relief legislation.

Need for Urgent Government Assistance for the Airline Industry

The Official Committee of Unsecured Creditors of UAL Corporation and United Airlines (formed by the United States Trustee arm of the U.S. Department of Justice) represents the interests of unsecured creditors of United in its ongoing bankruptcy case. Tens of thousands of corporations, small businesses, employees, local governments, airport authorities, and individual families in every state are among the unsecured creditor class represented by the Committee.

On behalf of these businesses and individuals, the Committee urges immediate and meaningful United States government action to bolster our domestic air transportation system, and in particular to preserve the viability and ongoing operations of United Airlines. The Committee is working closely with United to assist it in emerging from bankruptcy as a competitive carrier with a robust business plan. The precious time needed to work through the many business issues facing United and the industry can only be afforded if the non-market, adverse effects on United of the Iraq war are immediately blunted.

National policymakers and legislators must vocally join the creditor constituency in recognizing the devastating rippling effect that any dramatic decrease in United's operations would impose on vital portions of our nation's economy well beyond the U.S. aviation industry, both domestically and in the global marketplace.

As Congress and the Administration consider the nature and extent of new steps to ameliorate forces buffeting United and other carriers, it is critical to give voice to the tens of thousands of industries, companies, communities, and families whose operations and livelihood are inextricably woven with the fate of United and similarly situated network carriers.

United plays a significant role in our national economy and communities. Failure to offer immediate war-related relief to United and this industry as it restructures for a new era of global competition will jeopardize the future of commercial air travel. In the pending FY 2003 Supplemental Appropriations bill or in any stand-alone legislative measures that may emerge in the coming days, the Committee strongly requests adoption of relief provisions that provide immediate enhanced liquidity and financial support for United and the industry.

Sincerely, THE OFFICIAL COMMITTEE OF UNSECURED CREDITORS OF UAL CORPORATION AND UNITED AIRLINES

[Note: an economist would say that, while there is no doubt that the short-term fallout among those affected will be devastating, the assessment of the risk of UAL's collapse was grossly underestimated by those who chose to invest in it,  as stockholders, employees, or suppliers. Regardless the short-term effects, the taxpayers' and consumers' interests are best-served by allowing the marketplace to perform as it must, rather than artificially propping up failing businesses. As we have pointed out in the past, by not allowing businesses [e.g., US Airways, United, Hawaiian] to fail, the government is causing other businesses [e.g., American, others] to fail. "Every action has an equal and opposite reaction." --Sir Isaac Newton]

FMI: www.ual.com