United Airlines has delayed its emergence from Chapter 11 to 1 February next year, but expects to post a operating profit of $916 million for 2006 compared to the operating loss of $295 million projected for this year. Delta Air Lines, meanwhile, has accelerated its restructuring plan in a bid to avoid Chapter 11.
United, which entered bankruptcy protection in December 2002, finally filed its plan of reorganisation on 7 September. A bankruptcy court hearing has been scheduled for 11 October, after which the restructuring plan will be voted on by creditors. The plan includes a $2.5 billion all-debt exit financing package. United says it is “exploring the possibility” of a rights offering that would raise a further $500 million. This would be used to provide additional operating capital or to reduce the amount of exit financing required.
United’s reorganisation plan projects annual profits to 2010, but is based on oil prices of $50 a barrel despite soaring fuel costs and a current trading price of nearly $65 a barrel. United says it has no fuel hedges in place between 2006 and 2010.
The airline says its projections assume a mainline fleet of 453 aircraft by February next year, plus 300 regional jets and turboprops to be operated by United Express affiliates. The carrier predicts that mainline capacity will increase by 0.6% next year, while regional capacity will grow by 4.7%. Both will remain flat thereafter.
Delta, meanwhile, is to overhaul its Cincinnati, Ohio hub, expand its international schedule, end Boeing 767-200 operations and cut up to 1,000 more jobs as it accelerates its previously announced transformation plan in a bid to avoid Chapter 11.
All 14 of Delta 767-200s will be removed from service by 1 December, most having been sold to cargo operator ABX Air for delivery to Israel Aircraft Industries from next month to be converted to freighters . Delta will continue to operate the 767-300 and -400, but previously announced plans to drop four aircraft types from its fleet over the next four years.
Under its “hub realignment”, Delta will cut mainline and regional capacity at Cincinnati by 26% from 1 December, while expanding its operations at Salt Lake City, Utah and adding international services, mainly Latin American, at its Atlanta, Georgia hub.
KERRY EZARD/WASHINGTON DC
ADDITIONAL REPORTING BY DARREN SHANNON
Source: Flight International
