=20 ---------------------------------------------------------------------- This article was sent to you by someone who found it on SF Gate. The original article can be found on SFGate.com here: http://www.sfgate.com/cgi-bin/article.cgi?file=3D/chronicle/archive/2002/12= /03/BU78795.DTL ---------------------------------------------------------------------- Tuesday, December 3, 2002 (SF Chronicle) United delays debt repayments/Desperate airline offers mechanics revised wa= ge concession package David Armstrong, Chronicle Staff Writer Scrambling to avoid bankruptcy, United Airlines on Monday delayed paying back a $375 million debt for 10 days and convinced its mechanics to vote again on a slightly revised plan for wage concessions that was rejected last week. The board of directors of UAL Corp., United's parent company, decided Monday to exercise the option of extending repayment until Dec. 12 on aircraft- backed securities to the German bank Kreditanstalt fur Wiederaufbau. "United believes that taking advantage of the grace periods is a fiscally prudent step in light of its current financial situation," United said in a statement. The airline also exercised grace periods on the repayment of other debt obligations, including a $500 million debt to the German bank, plus $45 million in various smaller debts, for debts totaling $920 million. News of a second machinists vote and wiggle room for the debt payment lifted UAL stock. Shares rose 83 cents, or 34 percent, to close at $3.28 Monday on the New York Stock Exchange. Despite the airline's last-minute maneuvering to avoid bankruptcy, nearly all analysts predict it will be difficult for UAL to avoid Chapter 11, especially if it doesn't get the government's help. On the mechanics' vote, Ray Neidl, an analyst at Blaylock & Partners, said, "If it passes on Thursday, it maybe changes the likelihood of bankruptcy a little bit, but I still think bankruptcy is highly likely. They are moving the furniture around a little bit." United, the world's second-largest airline and the employer of 16,000 Northern California workers, is awaiting a decision from the federal Air Transportation Stabilization Board on whether it will get a $1.8 billion loan guarantee that the airline says it needs to avoid filing for bankruptcy protection. The board, a three-member panel set up after the Sept. 11 terrorist attacks to disburse repayable loans to beleaguered airlines, has not tipped its hand on a decision or its timing. A spokeswoman said from Washington, D.C., that the board does not comment on pending loan applications. United's decision to delay repaying $375 million in debt Monday and its repayment and requests for $5.2 billion in wage concessions over the next 5 1/2 years from its pilots, machinists, flight attendants, salaried nonunion personnel and others, are designed in large part to impress the board. The federal panel told United in a letter it made public in November that the carrier needed to cut operating costs more deeply to qualify for a loan guarantee. Officials at the mechanics' unit of the International Association of Machinists and Aerospace Workers urged members to accept some $700 million in wage concessions, the same amount rejected by 57 percent of those voting last week. Two other units of the IAM, representing ramp workers, customer service representatives and others, agreed to accept a combined $800 million in cutbacks over the next 5 1/2 years. A revised proposal, scheduled to be put to a second vote of members of District 141-M on Thursday, includes some tweaking on quality-of-life issues such as when members could take unpaid vacation days and form a joint management-labor committee with United. Scotty Ford, president of District 141-M, urged voters to accept the dea= l. In a letter posted on the union's Web site, Ford, who also backed the deal the first time, wrote, "The executive committee strongly recommends ratification, as it is the final opportunity to avoid bankruptcy and protect against the elimination of our entire bargaining agreement." UAL President and Chief Operating Officer Glenn F. Tilton has said that United will almost certainly file for Chapter 11 if it doesn't get the government loan. Philip Baggaley, credit analyst for Standard & Poor's, which has downgraded United stock to junk status, wrote Friday in a report to investors that Chapter 11 is "virtually inevitable for United and UAL." A federal bankruptcy court judge could void union contracts, analysts said, and filing for Chapter 11 would make the 55 percent of UAL stock owned by some employees virtually worthless. These possibilities worry union officials, who have pressed members to support concessions in a bid to help save the company and perhaps save their jobs. United also announced Monday that its on-time performance was tops among all the major airlines in October, with 99.6 percent of its scheduled flights leaving and arriving within 15 minutes of schedule, according to the Department of Transportation. On Sunday, the busiest travel day of the year, United's planes were 90.5 percent full, a company record, a United spokesman said. E-mail David Armstrong at davidarmstrong@sfchronicle.com. UNITED AIRLINE= S' RACE TO CUT LABOR COSTS What employees have been asked to give up the next 5 1/2 years to help s= ave=20 the airline from bankruptcy . No. of=20 Group employees Proposed cuts Status Pilots 8,800 $2.2 billion Ratified Machinists 13,000 $700 million Second vote Ramp, customer service workers 24,500 $800 million Ratified Salaried, nonunion staff 10,500 $1.3 billion Pledged Flight attendants 24,000 $412 million Ratified Source: Chronicle research ---------------------------------------------------------------------- Copyright 2002 SF Chronicle