Creditors Approve Repayment Plan
United Airlines reached
a significant milestone in its efforts to emerge from bankruptcy,
with its reorganization plan winning support from nearly all its
creditors. After over three years of operating under Chapter 11
protection, UAL execs are confident the end is in sight -- although
a few hurdles remain.
Disputes still needing to be resolved include a controversial
plan to give 400 managers 11 percent of stock in the reorganized
company. It is expected no major threats exist to United declaring
its solvency by February, however -- especially as, frankly, all
parties involved are weary of the 37-month long proceedings.
"I don't think anything's going to snag it now," Denver-based
airline consultant Michael Boyd told the Associated Press.
United will soon no longer have to concern itself with "the
distractions of restructuring," according to a recorded message
from management to United employees Tuesday. As a matter of fact,
the airline has set aside $400 million for capital improvements
this year -- such as revamped interiors, new ground equipment, and
more check-in kiosks. That amount is the most United has earmarked
for such measures since 2001, when the airline's problems began in
earnest.
It has been a rocky road for United, after filing for Chapter 11
protection in December 2002. As was reported in Aero-News in
November, the company posted a record third-quarter
loss of $1.77 billion -- all of it in reorganization costs.
Even if it emerges from
bankruptcy, analysts do not expect United to make money any time
soon (the airline's own projections hinge on fuel prices dropping
to $50 per barrel, don't hold your breath) -- but it's not likely
to go out of business either. Encouraging signs included a $9
million operating profit in November -- traditionally seen as one
of the weakest periods.
United CEO Pete McDonald added the airline will be making a wide
range of (unspecified) operational changes -- focusing entirely, he
said, on improving the quality of the airline.
"Kind of against all odds, they soldier onward," said New
York-based industry consultant Robert Mann. "Eventually it will
come up to put up or shut up time, but they do seem to be making
progress."
"Yes, they're (nearly) out of bankruptcy but it's taken them
three years of wallowing around like a brontosaurus in a tar pit,"
Mann added. "[But] if they do the right things, there's no way it's
going out of business."
United hopes to resolve any lingering issues before the January
18-20 confirmation hearing. Bringing those issues before the
bankruptcy court would possibly delay the court's approval of
United's reorg plan.