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United Airlines Bankrupt
Aired December 09, 2002 - 13:04 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.
KYRA PHILLIPS, CNN ANCHOR: United Airlines says it still hopes to survive, but United workers surely know this, most American airlines that end up bankrupt eventually fail. United made its official case today.
CNN's Ceci Rodgers now reports from Chicago.
(BEGIN VIDEOTAPE)
CECI RODGERS, CNN FINANCIAL NEWS CORRESPONDENT (voice-over): It's the airline industry's biggest bankruptcy ever, United falling victim to the brutal aftermath of the September 11 hijackings, a prolonged economic slump and its own high cost structure.
The No. 2 airline has been hemorrhaging red ink, losing $4 billion the past two years. But United reached the end of its financial rope last week after the Bush administration turned down its bid for a federal loan guaranty. Part of the reason was that Washington considered United's costs too high, even after it negotiated wage concessions with its unions.
Analysts say United in bankruptcy will first reduce its fleet of airplanes.
DAVID LEMAY, CHADBOURNE & PARKE LLP: It's fair to assume that some equipment that the company is now flying, that they will put aside and send back. Of course when the equipment goes, a smaller work force is needed and the company may seek work force reductions to right size the labor force to the fleet.
RODGERS: United's employees took majority ownership of the airline six years ago with the pilots holding the biggest stake. As a result, United's pilots have had the clout to negotiate the richest wages in the industry and bankruptcy, analysts say, that will change.
AARON GELLMAN, NORTHWESTERN UNIVERSITY: Well, I think they're going to cram down the throats, particularly of the pilots, much lower wages, change working conditions. The mechanics, to a lesser extent,...
RODGERS: Scott Sheilds is a United mechanic. Both he and his wife have worked for United for nearly 20 years.
PATTIE SHEILDS, UNITED FLIGHT ATTENDANT: We're a two-income family from the same company, so it's kind of -- it was kind of scary and still is kind of scary for us in that you know we don't know where it will go from here. RODGERS: If United's workers are trying to figure out where the company is going next, so are United's passengers. But the company says the airline will continue normal operation.
(on camera): Passengers are most worried about losing their United Frequent Flier miles. For Frequent Flyer programs earned the airlines a lot of money. And in bankruptcy, experts say, they're a crown jewel asset rarely tampered with.
Ceci Rodgers, CNN Financial News, Chicago.
(END VIDEOTAPE)
PHILLIPS: All right, so what if you have a ticket to travel this month on United Airlines? Most aviation analysts say do nothing. The thinking is that United won't change flight schedules through the holiday season. And if you have Frequent Flier miles, you needn't worry about those being taken off either. Historically, airlines have kept their Frequent Flier programs even in times of bankruptcy.
And if you're looking to book on United into next year, analysts say to start worrying about your flight sometime after February. Flight cutbacks, route restructuring and further changes could impact trips later on in 2003. And travel experts say to book with a credit card. You can always get a refund even if the airline goes completely out of business.
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 9, 2002 - 13:04 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
KYRA PHILLIPS, CNN ANCHOR: United Airlines says it still hopes to survive, but United workers surely know this, most American airlines that end up bankrupt eventually fail. United made its official case today.
CNN's Ceci Rodgers now reports from Chicago.
(BEGIN VIDEOTAPE)
CECI RODGERS, CNN FINANCIAL NEWS CORRESPONDENT (voice-over): It's the airline industry's biggest bankruptcy ever, United falling victim to the brutal aftermath of the September 11 hijackings, a prolonged economic slump and its own high cost structure.
The No. 2 airline has been hemorrhaging red ink, losing $4 billion the past two years. But United reached the end of its financial rope last week after the Bush administration turned down its bid for a federal loan guaranty. Part of the reason was that Washington considered United's costs too high, even after it negotiated wage concessions with its unions.
Analysts say United in bankruptcy will first reduce its fleet of airplanes.
DAVID LEMAY, CHADBOURNE & PARKE LLP: It's fair to assume that some equipment that the company is now flying, that they will put aside and send back. Of course when the equipment goes, a smaller work force is needed and the company may seek work force reductions to right size the labor force to the fleet.
RODGERS: United's employees took majority ownership of the airline six years ago with the pilots holding the biggest stake. As a result, United's pilots have had the clout to negotiate the richest wages in the industry and bankruptcy, analysts say, that will change.
AARON GELLMAN, NORTHWESTERN UNIVERSITY: Well, I think they're going to cram down the throats, particularly of the pilots, much lower wages, change working conditions. The mechanics, to a lesser extent,...
RODGERS: Scott Sheilds is a United mechanic. Both he and his wife have worked for United for nearly 20 years.
PATTIE SHEILDS, UNITED FLIGHT ATTENDANT: We're a two-income family from the same company, so it's kind of -- it was kind of scary and still is kind of scary for us in that you know we don't know where it will go from here. RODGERS: If United's workers are trying to figure out where the company is going next, so are United's passengers. But the company says the airline will continue normal operation.
(on camera): Passengers are most worried about losing their United Frequent Flier miles. For Frequent Flyer programs earned the airlines a lot of money. And in bankruptcy, experts say, they're a crown jewel asset rarely tampered with.
Ceci Rodgers, CNN Financial News, Chicago.
(END VIDEOTAPE)
PHILLIPS: All right, so what if you have a ticket to travel this month on United Airlines? Most aviation analysts say do nothing. The thinking is that United won't change flight schedules through the holiday season. And if you have Frequent Flier miles, you needn't worry about those being taken off either. Historically, airlines have kept their Frequent Flier programs even in times of bankruptcy.
And if you're looking to book on United into next year, analysts say to start worrying about your flight sometime after February. Flight cutbacks, route restructuring and further changes could impact trips later on in 2003. And travel experts say to book with a credit card. You can always get a refund even if the airline goes completely out of business.
TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com
