This article from NYTimes.com has been sent to you by psa188@juno.com. United Amends Cost-Cut Plan to Try to Get Loan Guarantee October 24, 2002 By EDWARD WONG United Airlines filed a revised business plan yesterday with the federal government to increase its chances of receiving a $1.8 billion loan guarantee, which would help it avoid a bankruptcy filing. To put one aspect of that plan in place, the company said that it would end service at four overseas airports and switch to smaller jets on some international routes. Reductions in labor costs are the most significant part of the plan, which would save the company $5.8 billion over five and a half years. In late June, the company filed an application with the Air Transportation Stabilization Board, which administers the $10 billion federal loan guarantee program; it called for cutting $950 million in labor costs over three years. That was not enough, the board said. So after much wrangling, United and its five unions agreed last week to $5.8 billion. United is now in talks with each union to determine how much each should contribute to the cuts. The flight attendants are negotiating for stock ownership, which the pilots, machinists and noncontract workers already have. The revised plan also calls for a 12 percent reduction in capacity, nonlabor profit improvements of $1.4 billion a year, starting a process to cut an additional $400 million in spending a year and reducing capital spending by $1.2 billion from 2003 to 2005. "The company continues to work tirelessly to find other means of enhancing revenue and lowering costs," Jake Brace, the chief financial officer of UAL, the parent company of United, wrote to the stabilization board in a letter accompanying the plan. The board, which has three voting members, has no timeline for acting on the application. But it is aware that United has a large debt payment due on Nov. 17. United has said it may have to file for bankruptcy before then if it is not able to obtain private financing. Mr. Brace has said that United has no access to the capital markets. It is asking for the federal loan guarantee to secure $2 billion in private financing. United has also been in talks with suppliers and vendors to work out financial aid deals, as well as with members of the Star Alliance, an extensive code-sharing partnership with several foreign carriers. United said the closing of four overseas stations and the shift to smaller jets on certain routes would save $120 million a year. On Jan. 7, United will shut service in Caracas, Venezuela; Santiago, Chile; and Düsseldorf, Germany. Fifteen days later, it will close its station in Milan, Italy. The closings will result in the loss of 69 jobs in Caracas, 110 in Santiago, 46 in Milan and 4 in Düsseldorf. "These cuts come as a result of careful analysis of the stations' profitability for the last several years," Graham W. Atkinson, United's senior vice president in charge of international operations, said in a statement. "Results from all four cities fall well below United's profitability hurdles." In addition, some international routes, like Paris to San Francisco, will be flown with Boeing 767 planes rather than larger Boeing 777's. http://www.nytimes.com/2002/10/24/business/24AIR.html?ex=1036463714&ei=1&en=55289c2f38a004e2 HOW TO ADVERTISE --------------------------------- For information on advertising in e-mail newsletters or other creative advertising opportunities with The New York Times on the Web, please contact onlinesales@nytimes.com or visit our online media kit at http://www.nytimes.com/adinfo For general information about NYTimes.com, write to help@nytimes.com. Copyright 2002 The New York Times Company