- The Washington Times - Friday, December 6, 2002

CHICAGO United Airlines stock went into a free-fall yesterday on expectations of a bankruptcy filing, an action its CEO insisted was not a foregone conclusion.
But sources familiar with the process, who spoke on condition of anonymity, said United was preparing to file for bankruptcy Sunday. The carrier was finalizing the terms of a $1.5 billion debtor-in-possession loan, the sources said. The loan would enable the airline to keep flying in bankruptcy.
It would be the biggest bankruptcy in airline industry history.
United's parent, UAL Corp., opened at $3.12 on the New York Stock Exchange and closed at $1, the lowest level in more than 40 years.
Trading was suspended for most of the morning because of what the NYSE said was "news that's pending that could materially affect the trading of the stock." But trading resumed later in the day with no announcement from United on its next move.
Dow Jones & Co. removed UAL from the Dow Jones Transportation Average and replaced it with United Parcel Service Inc.
UAL chief executive Glenn Tilton, asked about the possibility of bankruptcy, told Chicago's WLS-TV: "What we have said is we're going to consider all of our options, and nothing really is a foregone conclusion."
He has said that the airline would continue to fly whatever choice was made. United makes about 1,700 flights per day and has about 83,000 employees worldwide.
In bankruptcy, United's stock probably would become virtually worthless and the airline, which is 55 percent owned by its employees, would lose control of its restructuring to a judge.
Rank-and-file United workers said they were worried about the possibility of layoffs, benefit cuts and worthless stock.
"We've given our blood and sweat out there," said Daniel Kaulback, a baggage handler at O'Hare Airport in Chicago. "It's not worth squat."
Standard & Poor's further downgraded United's corporate credit rating, noting that nearly $1 billion in debt due next week already is considered in default. The debt would wipe out most of the airline's cash.
Germany's Lufthansa, which along with United belongs to the 14-member Star Alliance of airlines, said Thursday it was in talks about offering assistance to its embattled partner.
Lufthansa would want to secure any possible investment with assets such as planes or real estate, said Thomas Jachnow, spokesman for Europe's No. 2 airline.
After the federal Air Transportation Stabilization Board rejected the loan guarantee Wednesday, United's mechanics canceled a vote Thursday on $700 million in wage-and-benefits cuts that the airline said were needed to avert bankruptcy.
Union leaders said the rejection rendered the vote moot, and they assailed the decision by the government panel, which was created last year to help the airline industry recover after the Sept. 11 terrorist attacks.
United, the world's largest airline until American overtook it last year, traces its problems to a drop in passengers because of the weak economy and the terrorist attacks, an increase in competition from smaller discount airlines and failed business strategies.
It has lost more than $4 billion since the middle of 2000 and is headed for an industry-record loss of more than $2 billion for the second straight year.
The government board said that despite United's efforts to pare costs, including $5.2 billion in proposed labor concessions, "the business plan submitted by the company is not financially sound." But it said the airline could file a revised proposal even if it files for bankruptcy.

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