Looking for Consumer Confidence, United Faces Effects of BankruptcyBy Keith L. Alexander
THE WASHINGTON POST -- United Airlines Monday launched a major effort to convince customers, employees and suppliers not to abandon the company after it filed for bankruptcy and acknowledged that its losses had grown much worse in recent months.
The filing in federal bankruptcy court in Chicago by UAL Corp., the airline’s parent company, listed $22.8 billion in assets and $21.2 billion in liabilities, making it the largest U.S. airline bankruptcy in history.
United is the nation’s second-largest airline, with 80,000 workers who collectively own 55 percent of the company and now are likely to lose their entire stake.
The airline announced immediate pay cuts for managers and said it hopes to renegotiate its debt, win major concessions from its unions, and emerge within 18 months as a profitable, though probably smaller, carrier.
But that will depend on its ability to maintain and even increase revenue and keep its suppliers on board. During court proceedings Monday, UAL attorney James Sprayregen said the carrier expects to lose $20 million to $22 million a day in December and $10 million to $15 million a day in January, compared with losses of $7 million to $8 million at the end of September.
UAL chairman and chief executive Glenn F. Tilton spent the day greeting passengers at Chicago O’Hare International Airport, rallying employees, monitoring bankruptcy court proceedings and giving media interviews. Top executives visited other key airports.
“We’re going to perceive this not as a Chapter 11, but as a Chapter 1. It’s a new beginning for United,” Tilton said in an interview.
Tuesday many newspapers will carry full-page advertisements conveying that theme: “You will feel the new energy and the new optimism. You will feel the new beginning.”
Meanwhile the airline, which is trying to extract large concessions from its unions, announced pay cuts for 10,500 United officers and managers. Officers’ salaries will reduced by 11 percent and managers by between 2.8 percent and 10 percent, depending on their salary.
Tilton’s $950,000 salary will be cut 11 percent, but he plans to keep the $3 million bonus that he received when he joined the airline this past Labor Day weekend. He also has 1.15 million stock options, which will not be affected by the cuts.