United "just lost it as an airline," said Darryl Jenkins, head of George Washington University's Aviation Institute. "And at the time in their history when they need strong leadership the most, they don't have it."
But one United director, John Van De Kamp, said Creighton has "done a very good job under difficult circumstances."
| | | | _____ 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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When United applied for the loan guarantees in June, it was criticized by other airline executives, who noted that United had $2 billion in cash and $3.4 billion in aircraft assets, although it was losing more than $5 million a day.
United executives said the airline could not obtain public financing at economical rates.
Ray Neidl, an airline analyst at the investment banking firm of Blaylock & Partners, said United has enough funding to "limp" along outside of bankruptcy. But he said if the airline has to pay the $875 million debt without additional loans, major unexpected disruption in air travel could wipe out the airline's finances.
Harvey R. Miller, a senior partner at Weil, Gotshal & Manges LLP who specializes in airline reorganizations, said an airline can use a Chapter 11 filing to throw out costly labor contracts. Continental did that in 1982. When a company files, it can stop paying interest on its debts and the courts will protect the its assets from being seized by creditors.
But, Miller added, "The stockholder interest would be severely diminished or wiped out," which could hurt employees.
In 1994, United's pilots and machinists made $4 billion in wage and salary concessions. In exchange, they received 51 percent ownership in the airline as well as getting three out of the 12 seats on the board of director. That made United the largest employee-owned company in the nation.
