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UAL Still Mum on Reorganization Plans

In bankruptcy for eight months, the company posts another huge loss but offers no answers.

August 02, 2003|James F. Peltz | Times Staff Writer

Nearly eight months into bankruptcy proceedings, United Airlines has yet to tell the public much about what the carrier will look like -- and who might own it -- when United comes out of Chapter 11.

In posting another massive quarterly loss Friday, executives of United and its parent, UAL Corp., again declined to provide details of United's strategy for emerging from bankruptcy protection, which the airline hopes will occur late this year or in early 2004.

Some analysts are incredulous that United and UAL Chairman Glenn Tilton have been so mum about what routes and airports United plans to emphasize, the financial blueprint for United post-Chapter 11 and other specifics.

"We're stunned," said Ron Kuhlmann, vice president at Unisys R2A Transportation, a consulting firm in Hayward, Calif. "At United there is not word one. We're all wondering what they're doing."

Michael Boyd, president of the Boyd Group, a consulting firm in Evergreen, Colo., asserted that the silence means "there is no direction at United.... United isn't coming out with a vision of where it's going."

United spokesman Stephan Roth defended the carrier's posture, saying it's still weighing options. "We haven't articulated what that's going to be because we're still in the process of determining the best course," he said.

United, based in Elk Grove Township, Ill., is the nation's second-largest carrier, behind AMR Corp.'s American Airlines. United also is the biggest airline at the Los Angeles and San Francisco airports, with close to 20,000 workers in the state.

United does say it wants to strengthen its far-reaching mainline service and better exploit its alliances with international carriers.

United is still mulling over a low-fare subsidiary airline aimed at curbing market-share gains being made by Southwest Airlines Inc. and other discount carriers.

United also said it's thinking of again applying for a $1.8-billion federal loan guarantee. But the agency overseeing the guarantees, the Air Transportation Stabilization Board, has looked more favorably on applicants that have equity partners.

There has been no word on what firms or individuals are willing to buy stock in the "new" UAL. (UAL's existing stock now trades on the over-the-counter Bulletin Board, where it closed Friday at 48 cents a share, down 3 cents.)

United said its second-quarter loss widened to $623 million from $341 million a year earlier, as revenue fell 18% to $3.1 billion.

The wider loss in the quarter ended June 30 included various one-time items, including $300 million that UAL received as its part of a federal aid package to help the industry during the Iraq war. Excluding those items, UAL said it lost $476 million in the latest quarter.

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