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CNN Live Today
United's Woes, Airline May Seek Chapter 11 Protection
Aired December 02, 2002 - 10:21 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
LEON HARRIS, CNN ANCHOR: United Airlines is turning to its employees to keep the company solvent. Rejection last week by mechanics of a concession package threatened to put United on a final approach to bankruptcy court. Well, now the mechanics union may be rethinking its hard line.
CNN's Lisa Leiter is tracking the airline for us now from Chicago.
Hello -- Lisa.
LISA LEITER, CNN CORRESPONDENT: Hello, Leon.
Well, early this morning, leadership from the mechanics and United Airlines reached a new tentative agreement to save the airline about $700 million over the next five years. And like you said, this comes after rejection of an original plan on early Thanksgiving morning.
The major difference, the major issue of why the mechanics voted it down had to do with unpaid vacation days, and the new agreement basically allows them to choose their unpaid vacation days between now and -- between the years 2004 and 2007. For next year, however, they will have to take their first four vacation days unpaid.
And the rank-and-file members of the union will be voting on this new agreement on Thursday, December 5. So, obviously that's going to be a critical day for United.
And once again, they'll be able to select their unpaid vacation days, and also the original agreement that called for a 7 percent pay cut for mechanics and a 6 percent pay cut for those below mechanics' grade will remain intact.
And, Leon, the pressure is on United. Today, they have a $375 million loan payment due on aircraft-backed securities. The chief financial officer of the company telling me that they will be deciding at a board meeting today whether to make that payment or to invoke a 10-day grace period there.
But nevertheless, there are some analysts that believe that United will have a lot of trouble avoiding bankruptcy, even if it does win from the Air Transportation Stabilization Board $1.8 billion in federal loan guaranties. The board is expected to make that decision within the next few days. United needs that money in order to raise fresh capital in order to avoid bankruptcy, but there are some who think that Chapter 11 may be inevitable, Leon.
HARRIS: Lisa Leiter in Chicago -- thanks, Lisa. We'll check back with you later on, on all of this.
TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com.
Aired December 2, 2002 - 10:21 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
LEON HARRIS, CNN ANCHOR: United Airlines is turning to its employees to keep the company solvent. Rejection last week by mechanics of a concession package threatened to put United on a final approach to bankruptcy court. Well, now the mechanics union may be rethinking its hard line.
CNN's Lisa Leiter is tracking the airline for us now from Chicago.
Hello -- Lisa.
LISA LEITER, CNN CORRESPONDENT: Hello, Leon.
Well, early this morning, leadership from the mechanics and United Airlines reached a new tentative agreement to save the airline about $700 million over the next five years. And like you said, this comes after rejection of an original plan on early Thanksgiving morning.
The major difference, the major issue of why the mechanics voted it down had to do with unpaid vacation days, and the new agreement basically allows them to choose their unpaid vacation days between now and -- between the years 2004 and 2007. For next year, however, they will have to take their first four vacation days unpaid.
And the rank-and-file members of the union will be voting on this new agreement on Thursday, December 5. So, obviously that's going to be a critical day for United.
And once again, they'll be able to select their unpaid vacation days, and also the original agreement that called for a 7 percent pay cut for mechanics and a 6 percent pay cut for those below mechanics' grade will remain intact.
And, Leon, the pressure is on United. Today, they have a $375 million loan payment due on aircraft-backed securities. The chief financial officer of the company telling me that they will be deciding at a board meeting today whether to make that payment or to invoke a 10-day grace period there.
But nevertheless, there are some analysts that believe that United will have a lot of trouble avoiding bankruptcy, even if it does win from the Air Transportation Stabilization Board $1.8 billion in federal loan guaranties. The board is expected to make that decision within the next few days. United needs that money in order to raise fresh capital in order to avoid bankruptcy, but there are some who think that Chapter 11 may be inevitable, Leon.
HARRIS: Lisa Leiter in Chicago -- thanks, Lisa. We'll check back with you later on, on all of this.
TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com.
