United hones reorganization plan By Marilyn Adams, USA TODAY Under pressure to move faster after nearly six months in bankruptcy protection, United Airlines is expected to produce a preliminary reorganization plan in a few days or weeks. "We're finalizing the business plan that will be used in discussions with financial partners for exit," spokesman Rich Nelson said Thursday. He couldn't be specific. But other people close to the company say an early version might be ready as soon as next week. Pressure has been building from United's creditors, labor unions and others with interests in the airline's survival. Today, bankruptcy lawyers for United parent UAL are scheduled to be in court to answer an angry objection from the creditors' committee to the airline's growing use of reorganization adviser McKinsey & Co. UAL has asked the court for permission to buy another $4 million in services from McKinsey, work the committee hasn't seen and can't judge. The creditors' committee has asked the judge to block the request or allow access to the consultant because it "has not received any information on the types of services McKinsey has provided to date." In court documents made public Thursday, UAL's bankruptcy lawyers disagreed. "McKinsey is employed by (UAL), not the committee or any other third party and should not be subjected to such a probe," UAL lawyers said. The unusually public dispute signals continuing dissatisfaction by creditors and others with United's management team and what some see as heavy-handed management of the bankruptcy. "The good news is we have a bevy of consultants working with what some might consider a weak management team," says Greg Davidowitch, chairman of United's flight attendants union. "The bad news is it costs a fortune to do that." To date, bankruptcy consultants and lawyers have billed United more than $25 million. Since the Chapter 11 filing in December, UAL has had to battle a host of external problems, including a poor economy, the Iraq war and the SARS virus outbreak. Right before the war, UAL's lawyers raised the possibility the airline might default on its $1.5 billion in bankruptcy loans and liquidate. In recent days, UAL officials and their supporters have taken pains to project optimism. People familiar with UAL's $1.5 billion in bankruptcy loans say there's no longer any immediate threat of default. The airline recently obtained a $360 million IRS tax refund and $300 million more in federal war aid. It has restored 160 flights, is hiring reservations agents and has called back 1,500 flight attendants. Company officials now say they are considering exiting bankruptcy in the fourth quarter or first quarter of 2004 rather than mid-2004. But other experts, including some close to the case, are skeptical the business plan can be finished and approved by creditors and exit financing secured that soon. "From what I know from public information, they have some very big hurdles ahead of them," says veteran airline bankruptcy lawyer Jon Schneider of Boston. In bankruptcy, UAL already has obtained about $2.5 billion a year in labor-cost savings and is working toward $500 million a year or more in savings on aircraft leases. One controversial piece of the plan is UAL's proposal for a low-fare product to compete with low-fare carriers like Southwest. Early plans called for devoting 30% of United's domestic flying capacity to a branded low-fare carrier operated as a separate company. But knowledgeable people now say the scope of the low-fare operation will be smaller and not separate. *************************************************** 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/ Mas Site: www.tntisland.com/tntrecords/mas2003/ Site of the Week: http://www.caribbeanfloral.com TnT Webdirectory: http://search.co.tt *********************************************************