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Oct 19, 01, 12:03 pm
Breaking News
UAL Files Bankruptcy Warning Letter With SEC
UAL 14.75 -0.30 -1.99%
October 18, 2001
LOS ANGELES -- UAL Corp., parent of United Airlines, on Thursday filed a warning with the Securities and Exchange Commission that it is in danger of going out of business.
The nation's No. 2 carrier sent the same warning to its employees a day earlier. The filing with the SEC gives the warning more legitimacy and bolsters the company's claim that the warning isn't just a ploy to gain concessions from labor unions.
UAL's SEC filing and letter to employees say the airline could go bankrupt next year unless it can stem huge losses that have worsened dramatically since the Sept. 11 terror attacks.
United's management and the International Association of Machinists and Aerospace Workers, or IAM, were in talks to hammer out a new collective bargaining agreement until they ceased negotiations following the attacks on Sept. 11. IAM represents more than 45,000 mechanics and ground workers at United.
"The letter speaks for itself," said United spokesman Joe Hopkins, who declined to comment on speculation by analysts and the union that the letter was aimed at strengthening the company's position in labor negotiations.
Chief Executive James Goodwin wrote in the letter that the airline's costs are exceeding revenue at four times the pre-Sept. 11 rate.
"We are literally hemorrhaging money," Mr. Goodwin wrote. "Clearly, this bleeding has to be stopped -- and soon -- or United will perish sometime next year."
Even with a $15 billion industry bailout, airline officials have speculated that bankruptcy was imminent for weaker carriers, although they didn't name them.
The nation's second-largest airline was projected to lose $1 billion this year even before the attacks because of the sharp decline in business travel and lingering labor and service woes. United is more dependent on business travel than other major airlines, and has suffered greater losses both before and after the attacks.
Last week, the carrier said losses stemming from the attacks and subsequent grounding of its fleet probably will exceed the company's share of aid coming from a federal bailout package -- so far, $390 million of an expected $800 million.
United has already announced plans to lay off about 20,000 of its 100,000 employees. Monday, it said it is trimming its daily schedule to 1,664 flights -- down about 30% since the attacks -- as of Oct. 31.
Shares of UAL (UAL) were down $1.80, or nearly 11%, at $15.05 at 4 p.m. EDT on the New York Stock Exchange.
-- Pat Maio of Dow Jones Newswires contributed to this article
Copyright (c) 2001 Dow Jones & Company, Inc.
All Rights Reserved.
http://www.smartmoney.com/bn/ON/index.cfm?story=ON-20011018-000705-1518
UAL Files Bankruptcy Warning Letter With SEC
UAL 14.75 -0.30 -1.99%
October 18, 2001
LOS ANGELES -- UAL Corp., parent of United Airlines, on Thursday filed a warning with the Securities and Exchange Commission that it is in danger of going out of business.
The nation's No. 2 carrier sent the same warning to its employees a day earlier. The filing with the SEC gives the warning more legitimacy and bolsters the company's claim that the warning isn't just a ploy to gain concessions from labor unions.
UAL's SEC filing and letter to employees say the airline could go bankrupt next year unless it can stem huge losses that have worsened dramatically since the Sept. 11 terror attacks.
United's management and the International Association of Machinists and Aerospace Workers, or IAM, were in talks to hammer out a new collective bargaining agreement until they ceased negotiations following the attacks on Sept. 11. IAM represents more than 45,000 mechanics and ground workers at United.
"The letter speaks for itself," said United spokesman Joe Hopkins, who declined to comment on speculation by analysts and the union that the letter was aimed at strengthening the company's position in labor negotiations.
Chief Executive James Goodwin wrote in the letter that the airline's costs are exceeding revenue at four times the pre-Sept. 11 rate.
"We are literally hemorrhaging money," Mr. Goodwin wrote. "Clearly, this bleeding has to be stopped -- and soon -- or United will perish sometime next year."
Even with a $15 billion industry bailout, airline officials have speculated that bankruptcy was imminent for weaker carriers, although they didn't name them.
The nation's second-largest airline was projected to lose $1 billion this year even before the attacks because of the sharp decline in business travel and lingering labor and service woes. United is more dependent on business travel than other major airlines, and has suffered greater losses both before and after the attacks.
Last week, the carrier said losses stemming from the attacks and subsequent grounding of its fleet probably will exceed the company's share of aid coming from a federal bailout package -- so far, $390 million of an expected $800 million.
United has already announced plans to lay off about 20,000 of its 100,000 employees. Monday, it said it is trimming its daily schedule to 1,664 flights -- down about 30% since the attacks -- as of Oct. 31.
Shares of UAL (UAL) were down $1.80, or nearly 11%, at $15.05 at 4 p.m. EDT on the New York Stock Exchange.
-- Pat Maio of Dow Jones Newswires contributed to this article
Copyright (c) 2001 Dow Jones & Company, Inc.
All Rights Reserved.
http://www.smartmoney.com/bn/ON/index.cfm?story=ON-20011018-000705-1518