UAL Promises Continuity During Bankruptcy Reorganization

Stressing that not much will change for consumers and corporate clients, United Airlines parent UAL Corp. this morning filed for protection under Chapter 11 of the U.S. Bankruptcy Code. The widely expected filing becomes the largest-ever airline bankruptcy and among the largest in the history of Corporate America. United's stated goal is to emerge from bankruptcy protection in 18 months.

"It is absolutely business as usual," said United vice president of sales Frank Kent. "We are going to be out there aggressively taking care of accounts we have in place and gaining new accounts." United last week held a conference call with many corporate accounts and has another one planned for today. It will continue holding such calls as needed, Kent said.

"We feel for their pain and we want to be supportive," said Calvin Smoot, director of purchasing and travel services for the Church of Jesus Christ of Latter-Day Saints. The church, based in Salt Lake City, spends $80 million on global air travel annually. Smoot added that only a nullification of his corporate agreement would change the existing relationship. "If that is the case, there is a concern. Otherwise, we expect no disruption." Others among United's large corporate customers said they plan to stick by United unless drastic changes occur and impact corporate travel programs.

However, Kent insisted there would be no changes to existing or potential United corporate contracts. "Negotiations on renewals or new contracts will be the same as if they were taking place a month ago," he said. "There is no reason to believe there won't be transparency for the consumer, the corporate customer and the travel agency."

United said it will continue global operations and its "longstanding commitment to its customers, safety and reliability." Star Alliance affiliations, codeshare agreements, frequent flyer mileage redemption and accrual, and airport clubs all will continue. At the same time, United will examine its fleet, routes, labor costs and other aspects for potential cost savings.

Meanwhile, the company has arranged commitments for $1.5 billion in debtor-in-possession in order to continue operating during bankruptcy proceedings.