Wed, Mar 19, 2003
A Reuters news service report led
yesterday with a statement that "Bankrupt United Airlines... said
for the first time publicly that liquidation is a 'distinct
possibility.'"
Bookings, already slowed by the airline's persistent bad news,
have dropped. International bookings in the past week, the company
claimed, have dropped by about 40%.
The talk of liquidation apparently was pulled for the airline's
1113(c) filing Monday, that tried, in
the strongest terms possible, to convince the Bankruptcy Court to
cancel United's union contracts. It said, "With war-related jitters
increasing and fewer people purchasing tickets, United's near-term
revenue forecast through June 2003 has deteriorated by $298 million
from projections made just weeks ago." That wasn't all: "At the
same time, the cost of fuel, United's second-largest operating
expense, has gone in the opposite direction," they reminded the
Judge.
It's not that United is somehow unique in
that position; all the airlines are witnessing leaner bookings.
United (and US Airways, also in Chapter 11) are prohibited, though,
from entering forward contracts for fuel, meaning that UAL and USA
are particularly hit by the vagaries of the fuel market. [Of
course, there is no guarantee that, when fuel prices come down and
UAL isn't obligated to honor contracted prices, that UAL won't be
looking relatively better than other, non-Chapter 11 airlines
--ed.]
The dire warning that got CEO Jim Goodwin fired
a year and a half ago -- that, without major union concessions,
United would soon be facing its end -- now appears to be the
official company line. "Can you hear me now?" Goodwin must be
asking...
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