United Airlines said yesterday that it may file for bankruptcy protection if it is unable to slash costs within 30 days by obtaining significant concessions from its employees and creditors.
The disclosure, which was made in a filing with the Securities and Exchange Commission, said the airline has $875 million in debt due in the fourth quarter and it has "insufficient access to the public capital markets to repay" the debt. United, which reported a loss of $2 billion last year, said it needs to cut costs to win a badly needed $1.8 billion federal loan guarantee.
| | | | _____ Airlines in Trouble? _____ American Airlines (AMR)
Yearly Financials (in bil.)
Total Assets: $32,841 Total Liabilities: $27,468 Net Sales: $18,963 Net Income: -$1,762
More About American Airlines Delta (DAL)
Yearly Financials (in bil.)
Total Assets: $23,605 Total Liabilities: $19,836 Net Sales: $13,879 Net Income: -$1,216 More About Delta Airlines Northwest (NWAC)
Yearly Financials (in bil.)
Total Assets: $12,955 Total Liabilities: $12,667 Net Sales: $9,905 Net Income: -$423 More About Northwest Airlines United Airlines (UAL)
Yearly Financials (in bil.)
Total Assets: $25,197 Total Liabilities: $22,087 Net Sales: $16,138 Net Income: -$2,145 More About United Airlines US Airways (U)
Yearly Financials (in bil.)
Total Assets: $8,025 Total Liabilities: $10,640 Net Sales: $8,288 Net Income: -$2,124 More About US Airways Source: Disclosure Online Database (8/13/02) | | | | | | |
|
"Unless we lower our costs dramatically, filing for bankruptcy protection will be the only way we can ensure the company's future and the continued operation of our airline," United's interim chief executive, Jack Creighton, said in a statement.
United, the nation's second-largest airline, has been working intensely in recent weeks to wring millions of dollars in concessions from its unions and the federal loan guarantee.
Its decision to disclose the possibility of a bankruptcy filing follows heated criticism from some board members that Creighton has failed to act quickly and forcefully enough to convince employees that bankruptcy was a real possibility, according to sources.
United is the latest major airline to acknowledge serious financial troubles. This week, US Airways filed for bankruptcy protection and American Airlines announced a major overhaul of its operations. Other airlines say they are considering changes as they cope with last year's recession, the Sept. 11 hijackings and intense competition from low-cost carriers.
Sources close to the Air Transportation Stabilization Board, which reviews the federal loan guarantee applications, said United was an unlikely candidate for a guarantee because it had failed to obtain significant concessions from employees and creditors.
Only United's salaried employees and pilots have agreed to concessions. United's other two major unions -- the flight attendants and mechanics -- indicated yesterday that they remain reluctant to accept pay cuts.
"Nothing fundamental has changed from yesterday to today. Our approach to any sort of talks with United won't change," said Jeff Zack, a spokesman for United's 20,000 flight attendants.
Frank Larken, a spokesman for United's machinists union, said the group needed "fresh information before judging prospects of bankruptcy."
