CBS Market Watch Article is Interesting

It appears the link on the above post did not get in right. I have tried to paste the article.


CHICAGO (CBS.MW) -- UAL Corp. Chief Executive Glenn Tilton told workers Friday that a
bankruptcy filing was a "more likely outcome" at the same time that union leaders were
scrambling to come up with an 11th hour remedy to avoid it.

Also Friday, House Speaker Dennis
Hastert lambasted the federal rejection
of a loan guarantee that would have
enabled the parent of United Airlines to
restructure its operations out of court.

Hastert's pointed and angry remarks
also were aimed at Treasury Secretary
Paul O'Neill, who resigned Friday along
with the Bush administration's chief
economic advisor, Larry Lindsey. See
full story. That prompted talk in
Washington that the forced resignations
were partly related to UAL's failed bid for
federal help.

It even sparked speculation that UAL
(UAL: news, chart, profile) could
resubmit its application to the Air
Transportation Stabilization Board,
which soundly turned down UAL's
request for a $1.8 billion guarantee on
$2 billion in loans on Wednesday.

But in a taped message to United
employees, Tilton foreshadowed an
expected Sunday filing for bankruptcy
that eventually would lead to a "difficult
process" to reorganize the company.

"Obviously, with what was essentially a
'no' from the ATSB, Chapter 11
becomes a likely outcome because it
allows us to restructure and to continue
to serve our customers," Tilton said.

"Our plan will have to be more
aggressive than it was out of court," he
said, referring to the carrier's efforts to
take out $5.8 billion over 5 1/2 years.
"We will need more cost savings. Work
rules will be on the table."

He said the company has been preparing for Chapter 11 for a month by lining up financing, "and we
are ready if we decide to file."

That set off Paul Whiteford, chairman of the pilots' union, who was in Chicago meeting with leaders of
the carrier's other employee groups and management to hammer out last-ditch alternatives to
bankruptcy. Further cost-cutting issues were under discussion, union spokesmen said.

In a statement, Whiteford said the pilots were "surprised" by Tilton's comment on likely modifications
to wages and work rules. "It is very premature to discuss these issues," Whiteford said.

As the clock ticked toward a Saturday meeting of UAL's board that was expected to result in a vote
to seek bankruptcy protection, union leaders met in Chicago while their lobbyists in Washington
pressed for a second look at the UAL proposal, said Joseph Tiberi, spokesman for the International
Association of Machinists.

"The discussions are ongoing about the current situation and the possibility to avoid bankruptcy," he
said. "Restructuring outside of bankruptcy is still in the best interest of United."

Flight attendants' union spokesman Jeff Zack said the
unions also were discussing what steps would be needed
next. "We're trying to push the ATSB to give us a concrete
answer as to what an acceptable business plan looks like,"
he said.

"There are serious efforts going on to keep us out of
bankruptcy," Zack said. "We're within a day or two of finding
out what will happen."

In Washington, activity was hectic considering Congress
wasn't in session, said Michael McLaughlin, spokesman for Rep. William Lipinski (D-Ill.).

"This is not a dead issue," McLaughlin said.

Both Illinois Gov. George Ryan and Chicago Mayor Richard Daley's offices were ready to jump to any
UAL request, their spokesmen said. Daley, who was in Washington for the annual White House
Christmas party, wouldn't reveal his scheduled meetings for Friday, calling them "confidential."

Before he left, however, he told reporters that he intended to use his networking skills well with other
White House partygoers, including President Bush.

"Don't write them off yet," he said of UAL. "I see light at the end of the tunnel."

Some believed that the sudden resignations of O'Neill and Lindsey opened wider a door left ajar by
the ATSB for UAL to resubmit the application. O'Neill had been strongly opposed to anything even
coming close to an airline bailout.

"There will be some leaning on the White House," said Jim Berard, spokesman for Rep. James
Oberstar (D-Minn.), ranking member of the Commerce and Transportation Committee and a huge
supporter of the loan guarantee.

"When the secretary of the Treasury resigns, that may leave an opportunity for going back and
reversing a decision," Berard said.

That would probably please the House Speaker. Hastert minced no words in expressing how "very
disturbed" he was with the ATSB's "wrongheaded decision."

"I fear the ATSB decision now could reverberate ... throughout our entire economy," he said. "We
need to create jobs and grow our economy, not remain stagnant, or worse yet, go in reverse."

Jennifer Waters is the Chicago bureau chief for CBS.MarketWatch.com.
 
You must log in or register to reply here.

Latest posts

Back
Top