United Pilots Offer Assurance to Fliers

CHICAGO â€”  United Airlines’ pilots union urged travelers Sunday not to abandon the world’s No. 2 carrier as it prepares to seek federal Bankruptcy Court protection. The carrier’s parent, UAL Corp., was expected to file for reorganization today, sources said.

The Chapter 11 filing would be the largest airline bankruptcy in U.S. history and among the nation’s largest bankruptcies.

The filing would put a federal judge in charge of overseeing the tangled financial affairs of Oak Grove Village, Ill.-based United, which has been unable to stop more than two years of swelling losses and was rejected last week by the federal government for a $1.8-billion loan guarantee.

United, the largest carrier operating at Los Angeles International and San Francisco International airports, operates about 1,700 flights a day, or about 20% of all U.S. flights.

It plans to continue flying under bankruptcy protection. A reorganization in Bankruptcy Court probably would result in fewer flights, thousands of additional layoffs and other extensive cost-slashing.

United spokesman Joe Hopkins declined to comment and said the airline would have no announcement Sunday.

A source close to the company, who spoke on condition of anonymity, told Associated Press the filing would be in Chicago today but would not provide other details.

The company’s board of directors met in a special weekend session to discuss United’s emergency. Hopkins would not confirm that the board, which recessed late Saturday, was in session again Sunday. But a union source, who declined to be named, said the board reconvened Sunday. United’s unions have two seats on the board.

United has 83,000 employees, including 6,500 in California. Employees control 55% of the company.

Union leaders have told their members a bankruptcy filing is imminent and unavoidable, and Chief Executive Glenn Tilton has told employees it was becoming “a more likely outcome.�

Indeed, United’s employees Sunday sought to reassure customers that the airline would continue flying despite its financial status.

Shortly after takeoff Sunday from Chicago’s O’Hare International Airport, 747 Capt. John Willis bluntly addressed passengers aboard Flight 121 en route to Los Angeles.

“No doubt you’ve read about the possibility of United filing for bankruptcy,� he said. “It’s simply a financial operation. As far as you’re concerned, it should make no difference whatsoever.

“We will keep flying for many years to come, and we will be here as long as you will,� Willis added.

The airline’s ability to serve its most loyal customers was on the mind of Guido Bahler of Benlomond, Calif., who has accrued 400,000 frequent-flier miles as a business traveler.

“United has always been good to me,� Bahler said while waiting to board a flight to Denver with his wife and child at O’Hare. “I hope they’ll pull through.�

The company sent an e-mail message to its frequent-flier holders with assurances that members could continue to “accrue and redeem miles with confidence.�

“Challenging times make a company stronger, leaner and more focused,� United marketing executive Chris Bowers said in his e-mail to customers.

Earlier Sunday, United finished arrangements for $1.5 billion in financing needed to keep flying while in bankruptcy protection, people familiar with the situation said.

The total amount of the so-called debtor-in-possession financing remained fixed at $1.5 billion, but at the final hour, GE Capital pulled out of the group of lenders and was replaced by CIT Group, the sources said.

The other three lenders are J.P. Morgan Chase, Citibank and Bank One, they said. Bank One, based in Chicago, will take the heaviest exposure at $600 million. Of that, half is a separate credit line and half is its share of the remaining $1.2 billion divided equally among the four institutions.

United has enough resources to operate throughout bankruptcy protection but needs to swiftly cut further costs, said Ray Neidl, an airline analyst for New York-based Blaylock & Partners.

“If this thing keeps dragging on a long time it will mean the loss of customers and considerable resources,� he said.

United also has hired two high-profile public relations firms to help it present a bankruptcy filing in the best possible light and to encourage passengers to fly the airline.

United proposed $5.2 billion in labor cutbacks by 2008 in its pitch to the government, but the three-member Air Transportation Stabilization Board found the business plan was not financially sound.

The carrier’s shares fell 7 cents to 93 cents Friday on the New York Stock Exchange.