UAL to pay Indiana for not meeting development goal

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CHICAGO, Dec 29 (Reuters) - United Airlines, a unit of UAL Corp. (UAL),
likely will have to pay Indiana state and local governments millions of
dollars in 2002 for failing to meet spending goals in a 1991 economic
development agreement, a United spokesman said on Saturday.

"We have fallen short of our capital obligation and we are going to pay a
penalty," spokesman Joe Hopkins said.

The airline estimated earlier this year the penalty would be $32 million,
but the final amount has not been determined, he said.

The penalty is in connection with an agreement calling for United to build a
major maintenance facility at the Indianapolis International Airport in
return for $294.5 million in incentives from the state and city.


The Chicago Tribune reported on Saturday that United has spent $536 million
on the facility, short of $800 million it had agreed to spend.

United's penalties could rise over the next several years if other
provisions, such as hiring goals, are not met, Hopkins confirmed. The
Tribune reported that the airline could have to repay a total of $190
million.

The economic environment for United and other airlines changed following the
Sept. 11 attacks on the United States by men who hijacked commercial
aircraft and crashed them into New York's World Trade Center and the
Pentagon outside Washington.

Airlines slashed the number of flights as potential passengers chose to
avoid air travel.


©2001 Reuters Limited.

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