Liquidation possible if no cost cuts, United says

[Date Prev][Date Next][Thread Prev][Thread Next][Date Index][Thread Index]

 



Liquidation possible if no cost cuts, United says
By Marilyn Adams, USA TODAY

With war possible as soon as Wednesday, United Airlines warned that=20
liquidation is possible, and a credit-rating agency said American Airlines=
=20
could be in bankruptcy court in April. As war fears kept many fliers home,=
=20
the airline industry's vital signs grew more ominous Tuesday. United parent=
=20
UAL said in a bankruptcy-court filing that international flight bookings=20
have been off as much as 50% from a year ago and domestic bookings 20%=20
because of war jitters. UAL expects an $877 million first-quarter operating=
=20
loss. "Liquidation is a distinct possibility" if UAL doesn't get deep labor=
=20
cost cuts through negotiations or the bankruptcy judge, the filing said.=20
UAL, which is in talks with its unions, has asked the court to let it void=
=20
its labor contracts to cut costs. Union leaders pledged to do what's=20
necessary to keep United flying.

Meanwhile, Fitch Ratings said war creates a "very real risk" that American=
=20
parent AMR will follow UAL and US Airways into Chapter 11 reorganization=20
under bankruptcy court protection. AMR is negotiating cost cuts with its=20
unions. Without deals soon, "management may decide to move (into Chapter=20
11) sooner rather than later," said Fitch analyst Mark Oline. AMR ended=20
2002 with $2.7 billion in cash, but $775 million was restricted. Daily cash=
=20
losses exceed $5 million. "There's a greater-than-50% chance" United could=
=20
be forced into liquidation before June 30, Oline said. UAL said in court=20
papers its revenue through June is $298 million short of forecast and 2003=
=20
fuel costs could be up $300 million. Its chief financial officer is meeting=
=20
this week with bankruptcy lenders to seek relief from cash-flow targets the=
=20
banks set as a condition of $1.5 billion in loans. Knowledgeable people=20
said this week the banks have discussed war scenarios with UAL and could=20
waive the rules.

Also Tuesday:
=B7       A bill to help airlines will be introduced today by Rep. James=20
Oberstar, D-Minn., but passage isn't assured. He proposes extending=20
airlines' war-risk insurance, reopening the federal loan-guarantee program=
=20
for fuel purchases and drawing down the Strategic Petroleum Reserve, which=
=20
could lower jet-fuel prices.
=B7       Continental Airlines announced war-related cuts in schedules. It=
=20
reduced Newark, N.J.-London and Newark-Paris flights 50%. Newark-Tokyo=20
service will go to four flights weekly from seven.
=B7       Standard & Poor's said it may cut the credit ratings of 11=20
airlines. Moody's Investors Service put the credit ratings of Continental,=
=20
Delta and Northwest on review for possible downgrade, citing insufficient=20
cost cuts and weak travel demand. All three carriers' debt ratings are=20
already at "junk" status. Lower ratings make borrowing money more expensive.


***************************************************
The owner of Roger's Trinbago Site/TnTisland.com
Roj (Roger James)

escape email mailto:ejames@xxxxxxxxx
Trinbago site: www.tntisland.com
Carib Brass Ctn site www.tntisland.com/caribbeanbrassconnection/
Steel Expressions www.mts.net/~ejames/se/
Site of the Week: http://www.thehummingbirdonline.com
TnT Webdirectory: http://search.co.tt
*********************************************************

[Index of Archives]         [NTSB]     [NASA KSC]     [Yosemite]     [Steve's Art]     [Deep Creek Hot Springs]     [NTSB]     [STB]     [Share Photos]     [Yosemite Campsites]