UAL Secures Financing, ATSB Proposal Expected 'Shortly'
United Airlines parent UAL Corp. late yesterday formally announced financing arrangements agreed to by JPMorgan and Citigroup that will position it to emerge from bankruptcy protection. Each of the banks will provide to UAL $1 billion in exit financing, assuming the Air Transportation Stabilization Board approves UAL's application for a loan guarantee covering $1.6 billion of the total $2 billion package. UAL said an updated application to ATSB will be filed "shortly." The company's first application to ATSB, seeking a loan guarantee of $1.8 billion, was rejected and led to UAL's Chapter 11 filing last December. The exit financing also must be approved by the U.S. Bankruptcy Court overseeing UAL's reorganization.
UAL executives said the agreements with JPMorgan and Citigroup are further evidence that the company has made significant progress in lowering costs, improving productivity and enhancing revenue generation. "The willingness of both banks to include a substantial amount of at-risk funding reflects the credibility of our plan for the future," added UAL chairman and CEO Glenn Tilton.
"This is a vastly different company than it was a year ago, and we believe all the pieces are now in place to enable United to compete effectively," said Bill Repko, managing director and head of restructuring at JPMorgan.
UAL plans to complete its bankruptcy restructuring in mid-2004, but first must resolve issues related to its pension plans, feeder operations at Washington Dulles International Airport and leasing arrangements. Complete details of the company's revised business plan have not yet been made public.