=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/c/a/2002/12/06/UNITED.TMP ---------------------------------------------------------------------- Friday, December 6, 2002 (SF Chronicle) United fights to stay in the air/More union talks, financing sought David R. Baker, Chronicle Staff Writer United Airlines hustled to find emergency financing and huddled with its unions Thursday as the looming threat of bankruptcy devastated its stock. Its pleas for government help rejected, the nation's second largest airline tried to find the $2 billion it would need to keep flying after filing for bankruptcy, a step sources said could come as early as Sunday. At the same time, United's employee unions met with management hoping th= ey somehow could keep the company's future out of bankruptcy court. "The pilots have been meeting with the company today, and the plan is they'll work with the company as long as possible to achieve an out-of-court solution," said John Hartz, a spokesman for the United pilots within the Air Line Pilots Association. "The pilots still believe in the company and the franchise." United chief executive Glenn Tilton declined to say whether the company would file for bankruptcy but insisted it isn't the company's only option. "What we have said is we're going to consider all of our options, and nothing really is a foregone conclusion," Tilton told WLS-TV in the Chicago area, United's home base. He said United will emerge from its current ordeal as a better company. Wall Street, however, was not convinced. Panicked investors unloaded so many shares of United's parent company, U= AL Corp., early Thursday that the New York Stock Exchange temporarily halted the stock's trading. By day's end, the stock price had plunged nearly 68 percent to close at $1, on 45.3 million shares traded. The exchange's management said it would consider whether to continue listing the stock. FALLING LIKE A ROCK Thursday's plunge could be a taste of what awaits United stockholders if the company slides into bankruptcy. "The prospects of it being worth anything are very slim," said Nicolas Owens, an aerospace and defense analyst with the Morningstar research firm in Chicago. Its finances gutted by the drop in air travel following last year's terrorist attacks, United management has worked for months to keep the company out of bankruptcy. But its plans hinged on winning government backing for $1.8 billion in loans, a request the federal Air Transportation Stabilization Board denied Wednesday. The board, however, left open the possibility that United could reapply. Without those guarantees, many industry analysts consider bankruptcy the only option left. Even government aid might not have prevented it, said Bill Oliver, an analyst with the Boyd Group aviation research firm. His company's analysis of United's financing suggests the airline still would have run out of money in 2004 if it had won the government loan guarantees. "Notwithstanding a magic wand, we don't see how they can do it," Oliver said. United will have to look for ways to cut costs in every aspect of its business, not just its labor contracts, Oliver said. "They have to look at everything, every route they're flying, every mark= et segment," he said. "Like Latin America -- can United really afford to hold onto Latin America? It doesn't make a lot of money for them, in fact it loses money. These are the decisions they've got to look at." Already, the company faces $920 million in overdue debt, after choosing = to wait through a grace period on loans that came due earlier this month. The grace period ends on Dec. 12. TALKING WITH LENDERS United worked Thursday to secure "debtor in possession" financing, which would allow it to continue normal operations during bankruptcy. Although the company declined to name the possible lenders, the Associated Press reported that United was negotiating with J.P. Morgan, Citigroup, Bank One and GE Capital, part of General Electric. In addition, United also has sought financial help from other airlines with whom it has partnerships. United spokesman Joe Hopkins said Thursday the company has been in discussions with German air carrier Lufthansa. He declined to give further details of the talks. Should the airline file for bankruptcy, its unions face the prospect of seeing their contracts undone. United employees now own a majority of the company's stock, an unusual arrangement that was supposed to end a history of labor disputes at the airline. The Associated Press contributed to this report. / E-mail David R. Baker at dbaker@sfchronicle.com.=20 ---------------------------------------------------------------------- Copyright 2002 SF Chronicle