UAL to file reorganization plan early Aug
CHICAGO (Reuters) - United Airlines on Friday said it is ontrack to emerge from Chapter 11 in the fall even as it faces apotentially crippling labor strike going into a heavilytraveled holiday weekend. The No. 2 U.S. carrier, a unit of UAL Corp. (OTC BB:UALAQ.OB - news),said it intends to file a plan of reorganization around Aug. 1.The carrier will ask Judge Eugene Wedoff to approve a timetablefor filing the plan.
Although some analysts doubt it, company leaders have saidthey can bring United out of Chapter 11 in the fall. United hasbeen in bankruptcy since December 2002.
"United today is a vastly different company than it wasjust two-and-a-half years ago, despite extraordinarychallenges," United Chief Executive Glenn Tilton told employeesin a recorded message on Friday.
"There is much work ahead, but our emergence frombankruptcy as a far more competitive, effective and sustainablebusiness is now clearly within our grasp," he said.
United, based in the Chicago suburb of Elk Grove Village,Illinois, requested a hearing in September to approve itsdisclosure statement, a document that lays out the currentstate of the company's business and its financial model.
The carrier asked the court to fix Aug. 29 as the recorddate for determining the holders of stocks, bonds, debentures,notes and other securities who are entitled to receive ballotsand materials necessary for voting on the reorganization plan.
Experts have long expressed doubts about United's abilityto exit Chapter 11 this year. But Friday's court filing maysuggest the company sees its window of opportunity opening.
"I give them credit for pulling the trigger," said airlineconsultant Robert Mann. "It shows that they're willing to takea stab at it. It either says that they are far more confidentor that they believe (market) conditions will not improve."
United last month received court approval to file areorganization plan, without interference from other parties,through Sept. 1.
LABOR SHOWDOWN
Meanwhile, United is embroiled in a dispute with its flightattendants over the termination of company pension plans.United won court approval in May to shift its four pensions toU.S. government insurers, a move that would save the carrier645 million a year, while eroding employee benefits.
The Pension Benefit Guarantee Corp. on Thursday took overthe pension plans covering flight attendants and other workers,a move that may trigger a strike by the flight attendants.
"(A strike) can happen at any time now," said Sara NelsonDela Cruz, spokeswoman for the Association of FlightAttendants. "A possibility is certainly there for a strike overthe weekend. The repercussions are on United management'shead."
United has said a strike would be illegal and that it isprepared to go to court immediately if the flight attendantsstop work.
The AFA is the only union that has not yet negotiated areplacement retirement plan for its members. United said itstill hopes to reach a negotiated deal.
"It is unfair to other employees, completely ignores ourfinancial constraints and disregards the fact that theirmembership is the least impacted of all groups," said Unitedspokeswoman Jean Medina. "Given that, for the AFA leadership tothreaten to disrupt our operations, is completelyunconscionable."
Analysts generally sympathize with the plight of the flightattendants but denounce strike activity as disastrous to theairline."All it does is accelerate the date of the final paycheck,"Mann said. "It is not a productive or constructive exercise tobehave in that manner."The AFA, however, continues to fight pension terminationthrough legislation and litigation.
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