United Airlines has requested another extension to its restructuring. The airline, citing problems "beyond its control", says it now expects to leave bankruptcy in the third quarter, instead of mid-year, writes Darren Shannon.
"Much work remains to be done," United says in a bankruptcy court statement. "The debtors must still execute on their strategy to complete their work on several critical restructuring initiatives. Otherwise, the potential impact of the debtors' transformation may not be fully realised," it adds.
The unresolved initiatives are manifold, but all fundamental to United's bid to return to normal business practices. In United's own order, the issues are exit financing; pension obligations; retiree medical benefits; fleet restructuring; United Express; municipal bond obligations; executory contracts and unexpired leases; and unresolved financial claims against the carrier.
The airline's application to the US government's Air Transportation Stabilization Board for a $1.6 billion loan guarantee on a negotiated $2 billion loan is of great concern to United. The process of due diligence to obtain this backing, however, is "thorough and complex", says United, adding that the loan guarantee is dependent on the airline's ability to resolve its other financial and operational concerns.
United is reporting progress on its fleet restructuring. In addition to previously announced lease changes on 175 aircraft, the airline asked the court to consider the sale of the carrier's "entire" Boeing 767-200 fleet, of which United has nine, and "the rejection and replacement of certain other aircraft".
All plans could be overshadowed by United's ongoing problems with bond payments, however. In the filing, the airline notes several court cases and counter claims on its debt and current and revoked contracts.
Source: Flight International
