United files for Ch. 11, pushes on
In the largest bankruptcy in the history of the airline industry, United Airlines Filed for Chapter 11 protection after failing to qualify for Air Transportation Board (ATSB) loan guarantees (see WIT for Dec. 5, 2002), but securing debtor in possession funding form private lenders to keep its planes flying while it reorganizes its long-troubled finances. The loans agreements will not be enough to put the company back on a path to profitability without major restructuring to increase profits and cut costs, however, and contain provisions that could mean the end of the airline if it fails to turn itself around quickly. Although many of United’s financial problems can be traced to flawed strategies and mistakes by management, the airline will almost certainly be seeking new, larger concessions from unionized workers (see WIT for Nov 11 and 20, 2002), with the threat of a bankruptcy judge’s voiding of union contracts hanging in the balance.