Judge OKs United Airlines' Reorganization Plan

Published January 21, 2006

| Associated Press

United Airlines' reorganization plan won final approval by a judge Friday, clearing the way for the nation's second biggest carrier to come out of bankruptcy in less than two weeks.

The ruling by U.S. Bankruptcy Judge Eugene Wedoff, after remaining objections to United's reorganization plan were resolved this week, keeps United on a path to emerge from Chapter 11 on Feb. 1 after the largest and longest airline bankruptcy in history.

While the Elk Grove Village, Ill.-based carrier has kept flying throughout the bankruptcy proceedings, the United that exits bankruptcy will be much leaner than the cost-heavy one that began its restructuring on Dec. 9, 2002.

Parent company UAL Corp. has used the protection of federal bankruptcy law to trim $7 billion in annual costs, including two rounds of employee pay cuts; eliminate more than 25,000 jobs; dump its defined-benefit pensions and reduce its cost structure.

It also has shed more than 100 airplanes from its fleet, cut some U.S. flights and expanded internationally.

Once the 37-month restructuring is ended, the airline plans to spend more money this year on improvements, allocating $400 million for capital improvements such as more check-in kiosks, refurbished airplane interiors, upgraded computer systems and new ground equipment.

The airline's move to eliminate traditional pensions and replace them with less lucrative 401(k)-style ones prompted the biggest turmoil of its bankruptcy. That battle ended earlier this week when flight attendants ended a yearlong legal battle against the company and reached tentative agreement on a replacement retirement plan.

Some unions and industry experts say employee morale could still be an issue after United leaves bankruptcy, particularly with resentment still high over the stock plan that will award 8 percent of the 125 million new UAL shares to 400 top managers.

So will high fuel prices, which are hampering the company's efforts to get back into the black. UAL has reported more than $15 billion in net losses since mid-2000.

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