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.

FMI: www.united.com