United Airlines and Star Alliance partner Air Canada in recent weeks each took steps toward completing their respective bankruptcy reorganizations, though neither has a firm date for emergence from court-supervised protection.
United parent UAL Corp., which posted a net loss in April of $375 million after a first-quarter loss of $1.3 billion, said it met its third monthly requirement to maintain debtor-in-possession financing. CFO Jake Brace said the company was on track to meet DIP targets for May. UAL also said it increased its total cash position, finishing April with $1.7 billion in restricted and unrestricted cash. Cash burn, however, accelerated in April as the industry dealt with the double whammy of the Iraq war and severe acute respiratory syndrome.
With the largest expense item, labor, now covered under much less costly union contracts, United has turned its focus to revenue generation. "The company is currently finalizing aggressive and focused plans across all of its revenue disciplines so that we can fully address visible opportunities for improvement through refining and investing in our marketing and revenue management strategy," said John Tague, the airline's new executive vice president of customer
(see story).United's plan to move a portion of its domestic services into a new, in-house, low-cost carrier, however, remains in limbo. The company also has yet to finalize a target date for emergence from Chapter 11 protection. It continues to fine-tune a new business plan that may be sent to the Air Transportation Stabilization Board for another shot at a $1.8 billion federal loan guarantee. An earlier application for the loan was rejected, forcing UAL into bankruptcy last December.
North of the border, Air Canada this month reached an 11th-hour tentative deal with the Air Canada Pilots Association, staving off a possible grounding of the airline and completing a labor cost savings plan totaling more than C$1 billion. Air Canada CEO Robert Milton said employee sacrifices were "painful and unavoidable." Last week, Air Canada signed a letter of intent with American Express for a new, co-branded consumer and corporate charge card program. If finalized, the partnership also would call for Air Canada's Aeroplan loyalty program to be included in the American Express Membership Rewards program and for American Express to provide the airline with a cash advance in exchange for Aeroplan miles.