United Airlines is giving itself 30 days to win concessions from
its unions and come up with a new business strategy or face a
Chapter 11 bankruptcy filing.
Jack Creighton, the airline’s chairman and CEO, noted that the
airline is facing debt payments of $875 million in the fourth
quarter, and the company does not have sufficient access to the
public capital markets to repay them. He said the airline has
launched an “intensified recovery effort. ... We have given
ourselves a very short timeframe 30 days to conclude our
discussions with all stakeholders.”
Creighton said the airline is preparing for the potential of a
Chapter 11 filing this fall.
“Unless we lower our costs dramatically, filing for bankruptcy
protection will be the only way we can ensure the company’s future
and the continued operation of our airline,” he said.
Meanwhile, flight attendants at United made a very strong
statement in a press release concerning the airline’s attempt to
restructure and amend its application for a loan guarantee from the
federal government.
Questionable Decisions
Greg Davidowitch, flight attendants union council president,
said in the release that “short-sighted management decisions, such
as the premature announcement of a potential bankruptcy, will
ultimately cost the carrier more money in lost revenue from
passengers booking away than it could ever get out of flight
attendants’ pockets.”
Davidowitch added: “Before flight attendants invest our hard
earned wages in our airline, we must know what we are investing
in.
“Management must take the lead on the cost cuts it says it
needs, rather than saying, ‘We’ll only do it if everyone else
does.’ Management must recognize the unique benefits the United
flight attendants contract provides and the contributions we make
every day as the airline’s front-line employees.
“United says its total labor cost represents 52 cents of every
dollar of revenue, but flight attendant costs represent
approximately 7 cents of every dollar. No reasonable assessment of
United’s flight attendant costs could determine they are a problem
for the airline.”
