- The Washington Times - Thursday, October 24, 2002

CHICAGO (AP) United Airlines, battling to avoid bankruptcy, said yesterday it has submitted a strengthened loan-guarantee application to the federal government as it continues negotiating with its unions for $5.8 billion in labor-cost reductions.
The filing drastically increases the cost-saving measures envisioned by the nation's second-biggest carrier beyond those outlined in its application in June, including an additional 12 percent reduction in capacity.
Most other elements of the plan had been announced previously.
United said it submitted the updated business plan Tuesday night to the Air Transportation Stabilization Board, which had signaled the earlier plan was insufficient to receive the requested $1.8 billion loan guarantee.
It comes with United desperately seeking financial help and looking to restructure after reporting an $889 million quarterly loss last week. The airline, which had $1.66 billion in unrestricted cash at the end of September, faces $875 million in debt payments by Dec. 2 and has been burning through cash at a worsening rate that averaged $7 million a day in the third quarter.
Shares in United parent UAL Corp. rallied on the announcement and rose 24 cents, or 11.4 percent, to close at $2.34 in trading on the New York Stock Exchange.
The carrier said the changes to its original application included the targeted $5.8 billion in labor cuts over 5 years, non-labor savings of $1.4 billion annually plus a process for developing an additional $400 million in savings, and further reduction in 2003-05 capital spending of $1.2 billion.
United also said it is working with its vendors, lessors and lenders on unspecified additional measures to improve its financial position.
The linchpin of the proposed restructuring, the $5.8 billion in labor concessions, still hinges on agreements to be worked out between United and its five unions. Chief Financial Officer Jake Brace said in a letter accompanying the revised application that the airline is in the process of negotiating bilateral contract amendments with the unions.
Mr. Brace called the agreement in principle with the unions "a significant breakthrough in United's efforts to reduce our cost structure and will allow United to compete effectively with our lower-cost competitors."

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