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UAL files for bankruptcy
United Airlines has filed for Chapter 11 bankruptcy.
A statement from the carrier said: “The Chapter 11 process will facilitate UAL’s restructuring which is designed to restore the company to long-term financial health while operating in the normal course of business”.
United follows US Airways as the second major airline to file for Chapter 11 since September 11. It allows the airline to operate while it reorganises, primarily paying debts and cutting costs. UAL has set an ambitious target to reorganise itself back to profitability within 18 months.
The airline is stressing that it is business as usual – it will continue to issue tickets, honour tickets already sold, and will continue to participate in the Star Alliance. The loyalty scheme, Mileage Plus will also operate as normal.
UAL also announced that it has secured $1.5 billion in debtor-in-possession (DIP) financing from a number of sources including Bank One, a group led by J.P. Morgan Chase and Citibank.
UAL chairman, Glenn Tilton said: “We have begun the hard work of transforming our airline, and over the last several months have made progress in responding more effectively to changes in the marketplace and reducing the size of our airline to match demand.
“However, at this stage, reorganization through Chapter 11 offers the best way to provide uninterrupted service to our customers around the world, safeguard the value of our businesses and assets, and, ultimately, emerge as a stronger, healthier and more competitive airline.”
Read our previous stories:
06-Dec-2002 UAL crisis deepens
26-Nov-2002 United cuts more jobs
13-Nov-2002 United Airlines strikes vital deal
29-Oct-2002 UAL loss close to $1bn
29-Oct-2002 United to shed 1,500 jobs
25-Oct-2002 United scraps four more routes
12-Aug-2002 US Airways files for bankruptcy
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