UAL Fails to Meet Finance Requirements

Lenders give the company a waiver for each month of the fourth quarter

United’s parent company UAL Corp. lost $114 million in October and did not meet the requirements for its debtor-in-possession financing, the airline reported Nov. 30.

Fortunately for United, its DIP lenders have given the company a waiver from the requirements for each month of the fourth quarter, the airline said.

On Nov. 26, UAL needed and got the intervention of a bankruptcy court judge to at least temporarily prevent a group of creditors from repossessing 14 of the airline’s aircraft. The airline is trying to renegotiate its aircraft leases.

Jake Brace, the airline’s executive vice president and chief financial officer, said the airline is “actively reducing costs across the business to ensure that the company continues to maintain adequate liquidity.” That includes asking the bankruptcy court to void its union contracts and let it impose pay cuts if the unions don’t voluntarily agree to cost reductions by mid-January.