United Airlines Parent Signals Possible Bankruptcy Protection Filing

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Last updated at: (Beijing Time) Thursday, August 15, 2002

United Airlines Parent Signals Possible Bankruptcy Protection Filing

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United Airlines parent, UAL Corporation, has signaled a possible filing for bankruptcy protection due to its unprofitability, an common situation facing the US airline industry since the terror attacks in last September.

UAL Corporation, whose principal operating company is United Airlines, announced in a statement Wednesday that it may file for bankruptcy protection this fall unless it can cut costs.

United Airlines lost a record 2.1 billion dollars last year and another 851 million dollars during the first six months of 2002.

In addition, UAL Corporation is facing debt payment of 875 million dollars in the fourth quarter and the company has insufficient access to the public capital market to repay the debt,according to Jack Creighton, chairman and chief executive officer of the company.

"The world has changed" said Creighton. "Revenue isn't coming back the way the industry expected. Demand isn't returning, fares remain low, and the industry is grappling with how to respond."

The company has set a 30-day limit to try to reach agreements with employee groups on cost-cutting. Moreover, United Airlines is awaiting a decision on its application for a 1.8-billion-dollar government-backed loan that it says is necessary for it to competein a difficult market.

United Airlines is another one in a series which have announced to launch restructuring initiatives aimed at cost reduction. US Airways was the first major US airline which has somehow triggered the trend of retrenchment when it announced the decision to file for bankruptcy Sunday.

American Airlines, the leader of the industry, has also announced a restructuring plan that will trim 7,000 jobs by March and ground 74 jets.

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