United expected to file Chapter 11 reorganization Monday By Marilyn Adams, USA TODAY United Airlines is expected to seek Chapter 11 protection from creditors today in its hometown of Chicago, ending a hard-fought, six-month battle to stay out of bankruptcy. No disruption of operations is expected. Flights, reservations and frequent-flier miles won't be affected immediately. United's lawyers are expected to ask a bankruptcy-court judge for permission to tap $1.5 billion in bankruptcy financing to pay for continued operations. Several lenders, including Bank One, Citigroup, CIT Group and J.P. Morgan Chase, are prepared to provide debtor-in-possession financing, which allows a company to operate in bankruptcy, people familiar with the talks said. A source close to the company on Sunday confirmed the plans for the Monday bankruptcy filing. United will become the largest U.S. airline ever to go into bankruptcy. With 83,000 employees and about 560 jets, it is the world's second-largest airline by revenue. It will be the second major U.S. airline to seek bankruptcy protection since the Sept. 11 attacks. US Airways filed in August. United officials had no comment Sunday night. The filing isn't a surprise. Last Wednesday, United lost its bid to stay out of bankruptcy when a federal loan board denied its application for a $1.8 billion loan guarantee. The Air Transportation Stabilization Board said the application wasn't financially sound enough to assure repayment. Knowledgeable people said that United reached out to the Bush administration late last week in an attempt to determine what level of cost cuts could win approval. But federal officials declined to provide a dollar figure, and the appeal failed, those sources said. Airline officials remain hopeful the loan board might grant a guarantee later for financing to help it emerge from bankruptcy protection. Shares of UAL closed Friday at 92 cents as a bankruptcy filing appeared to be inevitable. Saturday and Sunday, the board of United parent UAL met to discuss a filing. A team led by bankruptcy specialist James Sprayregen of law firm Kirkland & Ellis has been preparing for months in case the loan application failed. United applied for the loan guarantee in June. Shortly after the terrorist attacks, Congress established $5 billion in grants and the $10 billion loan guarantee program to bolster the airline industry, which shut down for three days. United lost two jets in those attacks. United said it had no access to private financing because of its weak financial condition. The carrier has lost $4 billion since the third quarter of 2000, and $900 million in debt payments come due this week. Employees own 55% of UAL and representatives of the pilots and mechanics unions sit on the board. Employees, union and non-union, had pledged $5.2 billion in pay cuts over 51/2 years as part of United's loan application. In a bankruptcy, union leaders expect the airline to seek even deeper cost cuts to become profitable again. Labor union officials were braced for the inevitable. "No matter what happens, United Airlines will continue to fly our passengers," says pilots union spokesman Herb Hunter. "If it happens, it will be painful for employees, stockholders and vendors, but we'll come out stronger." The owner of Roger's Trinbago Site: Roj (Roger James) *************************************************** escape email mailto:ejames@escape.ca Trinbago site: http://www.tntisland.com CBC Website http://www.tntisland.com/caribbeanbrassconnection/ The Trinbago Site of the Week: (TnT News) http://www.tntmirror.com/ (TnT News) courtesy of Roj Trinbago Website & TnT Web Directory Roj's Trinbago Website: http://www.tntisland.com TnT Web Directory: http://search.co.tt *********************************************************