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.

FMI: www.united.com