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 *********************************************************