United Issues Statement On Future Operations
UAL Corporation, the
holding company whose primary subsidiary is United Airlines,
formally exited bankruptcy Wednesday, as expected, following
confirmation of the company’s Plan of Reorganization by the
United States Bankruptcy Court.
“Today, we have the business platform we need to compete
with the strongest carriers and a clear strategy of offering the
right service to the right customer at the right price,” said
Glenn Tilton, United's chairman, chief executive officer and
president. “As we move ahead, United is committed to
continuous improvement in costs, revenue and operations to optimize
our resources and sustain competitive margins. We have achieved a
great deal in our restructuring to reposition this company and
build upon our assets, an unrivaled global network and our
dedicated employees. We can be better. We are in a very competitive
industry, and we take nothing for granted.”
“Our approach is clearly working, as the numbers
show,” said Jake Brace, United’s executive vice
president and chief financial officer.
“We have substantially improved our financial performance
despite dramatic increases in fuel costs over the last 12 months.
And United has one of the best operating records in the industry
– in on-time departures, baggage handling, fewest customer
complaints and other areas helping us to outpace the industry in
unit revenue.”
Over the past three
years, United says it has, among other steps: reduced its average
annual costs by approximately $7 billion; substantially deleveraged
its balance sheet; strengthened its network while eliminating
unprofitable services; reconfigured its fleet to optimize the use
of its aircraft; significantly increased the productivity of all
its assets; and introduced new or expanded services targeted to
specific customer groups.
In particular, United also notes that it has increased its
international capacity to leverage competitive strengths, including
profitable international routes and its role in the Star Alliance,
the largest and most successful global airline alliance. To further
enhance its strong position with corporate and business travelers,
United launched a new premium transcontinental service – p.s.
– and significantly upgraded its regional jet service, United
Express, to offer both first-class and extra-comfort Economy Plus
services at a premium price. At the same time, it introduced a new
low-fare service, Ted, which is now competing in many markets,
while also acting as a feeder to United’s mainline
network.
United has obtained
exit financing on favorable terms through a syndication led by
JPMorgan Chase and Citigroup Global Markets. The company received
offers of subscription for more than twice the capital necessary to
support the $3 billion in financing it sought, enabling it to
reduce the financing cost by 75 basis points to 375 basis points
over the London interbank offered rate (LIBOR).
The exit financing consists of a $2.8 billion term loan and a
$200 million revolving credit line.
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