UAL shares take off after ATSB filing

Sean1999 Ram Air TA · 10-23-2002, 09:15 PM

UAL shares take off after ATSB filing
By Jennifer Waters, CBS.Marke****ch.com
Last Update: 5:33 PM ET Oct. 23, 2002

CHICAGO (CBS.MW) - Shares of United Airlines parent UAL Corp. jumped more than 11 percent Wednesday after the airliner said it had re-filed a loan request to the Air Transportation Stabilization Board - its last-ditch effort to stay out of bankruptcy.

UAL (UAL: news, chart, profile) shares closed up 24 cents, or 11.4 percent, at $2.34. The company, which has been on the brink of bankruptcy for months, admitted in August that a Chapter 11 filing could come this fall.

Underpinning the second application for a federal loan backup of $1.8 billion is an unprecedented "agreement" with all employee groups to take out $5.8 billion in labor costs over the next five-and-a-half years. Without offering details, the company said in a press release that it is negotiating bilateral contract amendments with all the unions.

UAL called the "a significant breakthrough" in the carrier's efforts to pare down operations and staffing.

It couldn't come soon enough. The company is burning through more than $7 million a day in operating costs and is only weeks away from facing the first of two huge debt payments totaling $875 million.

UAL said it needs $2 billion in financing to meet "current liquidity needs." On Friday, the company reported a third-quarter loss of $889 million, the second worst showing in its history, and the biggest since the carrier tumbled $2.1 billion into the abyss in last year's fourth quarter.

Other key elements of the updated business plan filed with the ATSB include UAL's plan to chop out 12 percent capacity while slicing $1.2 billion in capital spending over the next three years. The company also will tap on its vendors and lenders for better financial deals.

UAL will wipe out non-labor costs by $1.4 billion annually, and will figure out a way to save another $400 million.

In a subsequent announcement, the company laid out a second round of cost-cutting measures. This one includes halting service at four international locations and using smaller planes to move passengers on other certain international flights

This step is expected to shave about $120 million in costs. Service will be stopped in Caracas, Venezuela; Santiago, Chile; Dusseldorf, Germany; and Milan.

On Monday, UAL said it would purge 1,250 jobs when it shutters three reservations centers, a maintenance line and changes some schedules to regional carriers from its mainline service - tallying up $100 million in annual savings. The company expects to eliminate more jobs as it continues to make schedule changes.

10-23-2002, 09:15 PM	#1
Sean1999 Ram Air TA Senior Collector Join Date: Jan 2001 Location: Orlando, FL Posts: 249	UAL shares take off after ATSB filing UAL shares take off after ATSB filing By Jennifer Waters, CBS.Marke****ch.com Last Update: 5:33 PM ET Oct. 23, 2002 CHICAGO (CBS.MW) - Shares of United Airlines parent UAL Corp. jumped more than 11 percent Wednesday after the airliner said it had re-filed a loan request to the Air Transportation Stabilization Board - its last-ditch effort to stay out of bankruptcy. UAL (UAL: news, chart, profile) shares closed up 24 cents, or 11.4 percent, at $2.34. The company, which has been on the brink of bankruptcy for months, admitted in August that a Chapter 11 filing could come this fall. Underpinning the second application for a federal loan backup of $1.8 billion is an unprecedented "agreement" with all employee groups to take out $5.8 billion in labor costs over the next five-and-a-half years. Without offering details, the company said in a press release that it is negotiating bilateral contract amendments with all the unions. UAL called the "a significant breakthrough" in the carrier's efforts to pare down operations and staffing. It couldn't come soon enough. The company is burning through more than $7 million a day in operating costs and is only weeks away from facing the first of two huge debt payments totaling $875 million. UAL said it needs $2 billion in financing to meet "current liquidity needs." On Friday, the company reported a third-quarter loss of $889 million, the second worst showing in its history, and the biggest since the carrier tumbled $2.1 billion into the abyss in last year's fourth quarter. Other key elements of the updated business plan filed with the ATSB include UAL's plan to chop out 12 percent capacity while slicing $1.2 billion in capital spending over the next three years. The company also will tap on its vendors and lenders for better financial deals. UAL will wipe out non-labor costs by $1.4 billion annually, and will figure out a way to save another $400 million. In a subsequent announcement, the company laid out a second round of cost-cutting measures. This one includes halting service at four international locations and using smaller planes to move passengers on other certain international flights This step is expected to shave about $120 million in costs. Service will be stopped in Caracas, Venezuela; Santiago, Chile; Dusseldorf, Germany; and Milan. On Monday, UAL said it would purge 1,250 jobs when it shutters three reservations centers, a maintenance line and changes some schedules to regional carriers from its mainline service - tallying up $100 million in annual savings. The company expects to eliminate more jobs as it continues to make schedule changes. __________________ United Airlines Historian and Memorabilia Collector WAHS Member

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