The unions, however, face difficult choices because employees own 51 percent of United's outstanding shares, whose value could be wiped out if United filed for bankruptcy, according to industry experts.
In the SEC filings, United said it had revised its loan guarantee application to emphasize cost cutting efforts that the airline had made. The carrier said it has reduced it flight schedule by 20 percent, furloughed 20,000 employees, retired 99 planes and its entire 737-200 fleet.
| | | | _____ 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) | | | | | | |
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United also pointed to a recent agreement with US Airways to jointly market the two carriers' flights and allow their frequent fliers to travel on each other's planes. They pointed out that pilots have agreed to wage cuts of about $500 million in return for stock. Salaried employees have agreed to a 5 percent wage reduction.
In addition, the carrier said it has suspended the dividend on its common stock and Creighton's pay from Sept. 27 through the end of 2001. It closed its wholly owned subsidiary, Avolar, a business jet subsidiary.
United's problems began almost two years ago as it was trying to acquire Arlington-based US Airways, according to analysts. During those intense negotiation, United officials were distracted from dealing promptly with problems, such as a contract dispute with pilots and new competition, the analysts said.
The US Airways deal was killed last year by the Justice Department because of concerns about competition. By then United's shares had tumbled.
When Creighton was named interim chief executive in October, he repeatedly said bankruptcy was not an option, he repeatedly said bankruptcy was not an option. Creighton, a United director, replaced James E. Goodwin after Goodwin warned employees of a potential bankruptcy.
In fact, until yesterday, United executives had played down statements by Wall Street analysts and airline consultants that the carrier might be headed for bankruptcy.
"At some point you have to pull the trigger. If you wait around and get your ducks lined up when you hit your crisis point, it's too late. US Airways created the template," said a source close to United who was critical of Creighton.
Early in its labor negotiations, US Airways executives announced that the airline would file for bankruptcy protection unless it received major concessions from its employees and creditors and was granted a federal loan guarantee.
