- The Washington Times - Monday, December 9, 2002

From combined dispatches
United Airlines is expected to file for bankruptcy as early as this morning after securing $1.5 billion in financing last night so it can keep flying.
The airline's bankruptcy would be the largest ever in the industry, which has been losing money rapidly since the September 11 terrorist attacks.
United made no official announcement, but Reuters news agency reported that directors of United's parent company, UAL Corp., met with lenders yesterday to reach a deal to keep the airline operating while under bankruptcy court protection from its creditors.
J.P. Morgan Chase, Citibank, Bank One and CIT Group are the lenders, sources said.
Analysts and members of the airline's unions said late last week that a bankruptcy filing was inevitable after the Air Transportation Stabilization Board on Wednesday rejected United's plea for a $1.8 billion government loan to back $2 billion from the private sector. Chief Executive Glenn Tilton told employees bankruptcy has become "a more likely outcome."
Meanwhile, United's pilots union yesterday urged travelers not to abandon the world's No. 2 carrier if it files for federal bankruptcy court protection.
"We're going to be flying airplanes, today, tomorrow, next week and next year," pilots spokesman Herb Hunter said. "We don't want people to give up on us, because we're going to come through this."
United spokesman Joe Hopkins, reached at company headquarters, refused to confirm whether the board met yesterday, and offered no further comment.
But union sources, who spoke on the condition of anonymity, said directors would resume a meeting that Mr. Hopkins would say only had "recessed" Saturday afternoon.
United, based in suburban Elk Grove Village, Ill., is on a pace to lose an industry-record $2.5 billion this year. The airline had warned for months that a bankruptcy filing was likely if it didn't receive the federal loan guarantee.
"This is going to be painful for the stockholders and the employees, but the airline's going to keep flying, and we're going to come out of this stronger," Mr. Hunter said. "The passengers shouldn't notice any difference."
United proposed $5.2 billion in labor cutbacks by 2008 in its pitch to the government stabilization board, but the three-member panel found the business plan was not financially sound.
Competing airlines are likely to benefit from a United bankruptcy, analysts said, because United probably would be forced to cut some service.
Meanwhile, other airlines are expected to use United as an example of what may happen to them if they do not cut costs dramatically, and some analysts have said a low-fare business model will increase in popularity. Airlines also could move away from the traditional hub-and-spoke system and offer more point-to-point flights. While this shift would lower costs, it also would mean far fewer flights for travelers.
United's 83,000 employees own 55 percent of the company. The carrier's stock closed at 93 cents a share Friday on the New York Stock Exchange.
Staff writer Tim Lemke contributed to this report.

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