Four airports agree to grace period on United bonds, hearing

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Four airports agree to grace period on United bonds, hearing

CHICAGO (AP) =97 Four airports on Monday agreed to give United Airlines a=20
15-day grace period before proceeding with eviction actions should the=20
airline fail to make debt payments on about $1.7 billion in bonds. UAL,=20
parent of United Airlines, believes it doesn't have to make payments on the=
=20
special-facilities revenue bonds, originally intended for=20
airport-improvement projects, due to restrictions put in place after the=20
airline sought federal bankruptcy protection in December. UAL says the=20
payments represent unsecured debt which wouldn't be paid while it is in=20
bankruptcy. But representatives for the airports in Denver, Los Angeles,=20
New York and San Francisco contend the payments must be made. UAL has about=
=20
$16 million in payments due on April 1. On March 1, UAL missed a $3.2=20
million payment on bonds for improvements at Chicago's O'Hare and a $1=20
million payment on Miami-Dade bonds. UAL's bonds were generally unchanged=20
Monday. According to UAL's annual report, filed with the Securities and=20
Exchange Commission late Friday, if default provisions are triggered, the=20
company could lose its status as a "signatory airline" which would result=20
in higher rents and landing fees. UAL earlier this month filed temporary=20
restraining orders to prevent the airports from starting default actions=20
should the airline decide not to make payments. But Judge Eugene R. Wedoff=
=20
of the U.S. Bankruptcy Court for the Northern District of Illinois refused=
=20
to grant the company's requests, saying UAL must wait until there is=20
actually a default before bringing the matter before the court. In addition=
=20
to the 15-day minimum grace period, the sides on Monday also agreed to a=20
May 23 hearing date to determine how to proceed with a formal trial on the=
=20
matter. Shares of UAL closed at 84 cents Monday, down 1 cent, or 1.2%, on=20
the New York Stock Exchange.


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