United Airlines on Friday said it is on track to emerge from Chapter 11 in the autumn even as it faces a potentially crippling strike going into a heavily traveled holiday weekend.
United said it intends to file a plan of reorganization around August 1. The carrier will ask Judge Eugene Wedoff to approve a timetable for filing the plan.
Although some analysts doubt it, company leaders have said they can bring United out of Chapter 11 in the autumn. United has been in bankruptcy since December 2002.
"United today is a vastly different company than it was just two-and-a-half years ago, despite extraordinary challenges," United Chief Executive Glenn Tilton told employees in a recorded message on Friday.
"There is much work ahead, but our emergence from bankruptcy as a far more competitive, effective and sustainable business is now clearly within our grasp," he said.
United requested a hearing in September to approve its disclosure statement, a document that lays out the current state of the company's business and its financial model.
The carrier asked the court to fix August 29 as the record date for determining the holders of stocks, bonds, debentures, notes and other securities who are entitled to receive ballots and materials necessary for voting on the reorganization plan.
Experts have long expressed doubts about United's ability to exit Chapter 11 this year. But Friday's court filing may suggest the company sees its window of opportunity opening.
"I give them credit for pulling the trigger," said airline consultant Robert Mann. "It shows that they're willing to take a stab at it. It either says that they are far more confident or that they believe (market) conditions will not improve."
Meanwhile, United is embroiled in a dispute with its flight attendants over the termination of company pension plans. United won court approval in May to shift its four pensions to US government insurers, a move that would save the carrier USD$645 million a year, while eroding employee benefits.
The Pension Benefit Guarantee Corporation on Thursday took over the pension plans covering flight attendants and other workers, a move that may trigger a strike by the flight attendants.
"(A strike) can happen at any time now," said Sara Nelson Dela Cruz, spokeswoman for the Association of Flight Attendants. "A possibility is certainly there for a strike over the weekend. The repercussions are on United management's head."
United has said a strike would be illegal and that it is prepared to go to court immediately if the flight attendants stop work.
The AFA is the only union that has not yet negotiated a replacement retirement plan for its members. United said it still hopes to reach a negotiated deal.
"It is unfair to other employees, completely ignores our financial constraints and disregards the fact that their membership is the least impacted of all groups," said United spokeswoman Jean Medina. "Given that, for the AFA leadership to threaten to disrupt our operations, is completely unconscionable."
Analysts generally sympathize with the plight of the flight attendants but denounce strike activity as disastrous to the airline.
"All it does is accelerate the date of the final paycheck," Mann said. "It is not a productive or constructive exercise to behave in that manner."
The AFA, however, continues to fight pension termination through legislation and litigation.
