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Sat, Oct 08, 2005

Ka-CHING! UAL Gets $3 Billion In Financial Backing

That's A Big Step Toward Bankruptcy Exit

United Airlines, long mired in federal bankruptcy court, may now have a way out. JP Morgan and Citigroup have signed on to arrange $3 billion in financing to help the beleaguered carrier emerge from federal debt protection as planned in February.

"Today represents a validation of three years of hard work, that at the outset, many critics said could not be done," said Jake Brace, United's chief financial officer, quoted by Reuters.

The letter of commitment was filed in Chicago federal court on Friday. It will be considered by the judge on October 21st.

The JP Morgan and Citibank offers were among four considered by the airline, which has been in bankruptcy since 2002. Since then, UAL has stood behind the veil of bankruptcy protection as it cut salaries and dumped its employee pension plan.

But, as is the case with other financially-struggling airlines, emerging from bankruptcy court doesn't guarantee success. The entire industry remains dogged by rising fuel costs and downward pressure on fares from low-cost carriers.

FMI: www.united.com

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