United Seeks Bankruptcy Protection Airline Tries to Reassure Customers, Suppliers

United Airlines yesterday launched a major effort to persuade customers, employees and suppliers not to abandon the company after it filed for bankruptcy and acknowledged that its losses had grown much worse in recent months.

The filing in federal bankruptcy court in Chicago by UAL Corp., the airline's parent company, listed $22.8 billion in assets and $21.2 billion in liabilities, making it the largest airline bankruptcy in U.S. history.

United is the nation's second-largest airline, with 80,000 workers who collectively own 55 percent of the company and now are likely to lose their entire stake.

The airline announced immediate pay cuts for managers and said it hopes to renegotiate its debt, win major concessions from its unions and emerge within 18 months as a profitable, though probably smaller, carrier.

But that will depend on its ability to maintain and even increase revenue and keep its suppliers on board. During court proceedings yesterday, UAL lawyer James Sprayregen said the carrier expects to lose $20 million to $22 million a day in December and $10 million to $15 million a day in January, compared with daily losses of $7 million to $8 million at the end of September.

UAL chairman and chief executive Glenn F. Tilton spent the day greeting passengers at Chicago's O'Hare International Airport, rallying employees, monitoring bankruptcy court proceedings and giving media interviews. Top executives visited other key airports.

"We're going to perceive this not as a Chapter 11, but as a Chapter 1. It's a new beginning for United," Tilton said in an interview.

Today many newspapers will carry full-page advertisements conveying that theme: "You will feel the new energy and the new optimism. You will feel the new beginning."

Meanwhile, the airline, which is trying to extract large concessions from its unions, announced pay cuts for 10,500 United officers and managers. Officers' salaries will be reduced by 11 percent and managers by between 2.8 percent and 10 percent, depending on their salaries.

Tilton's $950,000 salary will be cut 11 percent, but he plans to keep the $3 million bonus that he received when he joined the airline this past Labor Day weekend. He also has stock options for 1.15 million shares, something that will not be affected by the cuts.

The pilots had agreed to 18 percent pay cuts, as part of the $5.2 billion in labor concessions that United negotiated in an effort to win a $1.8 billion federal loan guarantee. The leaders of the International Association of Machinists negotiated a 7 percent cut for mechanics, but union members have not approved it. The cuts were contingent on federal approval of the loan guarantee.

But the government rejected the airline's application last Wednesday, causing United to file for bankruptcy protection from its creditors. Sources close to the company said United will now need more cuts to emerge from bankruptcy.