SCOTT HAMILTON / SEATTLE & DAVID FIELD / WASHINGTON DC
United Airlines has asked the US Air Transportation Stabilization Board (ATSB) for two more weeks to win staff concessions in order to secure approval for a $1.8 billion loan guarantee from the board.
The airline had set a 16 September deadline to reach labour deals or file for bankruptcy reorganisation. New chief executive Glenn Tilton told the carrier's Air Line Pilots Association last week that the new deadline is 30 September. United needs cost-cutting pacts with unions to win ATSB approval for the loan guarantee. Credit Suisse First Boston airline analyst Jim Higgins says pilot leaders may now realise the airline's dire situation.
The country's second largest airline inched closer to reorganisation last week when it hired bankruptcy turnaround expert Rothschild. Meanwhile, the Fidelity mutual funds group, one of the biggest shareholders in United parent UAL, has sold most of its 6.7% holding.
Some of the biggest names in leasing are watching United's progress. Lessors, including AT&T Credit, BancOne, Bell Atlantic, Ford Motor Credit, General Foods Credit and General Electric's finance and aviation units, have more than $1 billion worth of aircraft with United that will be subject to restructuring. GE Capital Aviation Services refinanced $775 million worth of aircraft this year in a debt deal, but is reportedly unwilling to do more financing.
United says it has more than $3 billion worth of unencumbered aircraft that may be offered as collateral to the ATSB in exchange for a loan guarantee. Its in-service fleet was valued at $15.74 billion this year, says UK consultancy Airclaims.
The vast majority of United's fleet was financed when lease rate factors were 0.75% to 0.80%. On a then-new Boeing 737-300 costing $24 million, the equivalent month lease rate was as little as $150,000. Today's lease rates are closer to $100,000 a month or less.
Source: Flight International
