UAL Files Reorganization Plan

United Airlines parent UAL Corp. today filed a plan of reorganization and a disclosure statement with the bankruptcy court overseeing the company's Chapter 11 case. Chairman and CEO Glenn Tilton told employees that today's filing starts the countdown to an early 2006 emergence from bankruptcy protection.

UAL has targeted Feb. 1 for its exit, more than three years after the company's December 2002 bankruptcy declaration. "We are now competitive with leading network carriers," Tilton said, citing an 18 percent improvement in unit costs, excluding fuel, and industry-beating unit revenue performance achieved during the restructuring.

Documents filed today with the bankruptcy court include various financial projections that show the company regaining profitability in 2006. Once reorganization items are settled, UAL projects 2007 net income of $510 million. Those results are projected to improve each year through 2010, when the company expects to net nearly $1 billion.

United forecast passenger revenue to grow 2.8 percent annually from an estimated $15 billion in 2005 to $17.3 billion in 2010. The company cited capacity shifts to international routes and industrywide fare increases for shorter-term revenue growth. Passenger revenue per available seat mile is predicted to grow 5.2 percent this year, 2.6 percent next year and just above 2 percent annually thereafter.

In terms of capacity, United said combined mainline and United Express operations would generate slightly more available seat miles in 2006 compared with this year, and then remain relatively flat through 2010.

Total annual expense projections for 2006 to 2008 are below the estimated figure of $17.3 billion for 2005, and then rise to $18 billion by 2010. Fuel costs in particular are expected to decline from the 2005 estimate of $3.8 billion to $3.4 billion in 2009. UAL has earmarked $150 million per year for fuel hedges, starting in 2007, "to lock in as much of its fuel needs at $50 per barrel as possible."

Meanwhile, United expected "significant benefits will be derived" by reducing aircraft turn times, further de-peaking operations at hubs and other major stations, and "reengineering the use of airport facilities."

The bankruptcy court has scheduled a hearing for Oct. 11 to assess the adequacy of UAL's disclosure statement. Should the court approve, the company then would begin to solicit votes for confirmation of the reorganization plan.