The fallout from last year's terrorist attacks threatens to claim yet another victim. UAL Corp.
On the heels of Tuesday's announcement of AMR Corp.'s
However, the International Association of Machinists union, representing the company's mechanics, ramp workers, and customer-service agents, has refused a similar request, citing $500 million in already-deferred wages. United's flight attendants have declined concessions as well. The airline may have the edge in the negotiations, threatening a bankruptcy plan that would wipe out its employees' equity.
"The changes we need to make are urgent, significant, and immediate," said CEO Jack Creighton. That's because United faces an $875 million debt payment in the fourth quarter. Though the company has $2.8 billion in cash, it's also burning $1 million per day in operations. In addition, the state of the industry has left United without access to capital to finance the debt.
The bankruptcy threat signals United's final effort to gain a $1.8 billion government loan guarantee to cover the debt. The company's ability to secure the guarantee is contingent upon its restructuring effort, and its survival is contingent upon that guarantee.
United Airlines' stock is currently down over 92% from $34.08 on Aug. 15, 2001, and down 50% over the past week. In after-hours trading yesterday, the stock hit $1.60, hitting a level not seen in decades. Shares have rebounded strongly, reaching $2.60 early this afternoon.