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The Honolulu Advertiser
Posted on: Wednesday, December 11, 2002

United focuses on cost cuts, passengers

By Dave Carpenter
Associated Press

CHICAGO — A day into its bankruptcy reorganization, United Airlines held preparatory talks with its unions on concessions while its CEO began a tour of United's U.S. hubs as part of a campaign to reassure passengers and employees.

United Airlines CEO Glenn Tilton spoke at Denver International Airport as part of a tour of United's U.S. hubs, designed to reassure the airline's passengers.

Associated Press

The world's No. 2 airline stressed that it was business as usual for its daily flight operations after the largest bankruptcy filing in aviation history.

But its financial emergency, including daily losses as high as $22 million, continues despite the protection of U.S. Bankruptcy Court. United moved quickly to start addressing top priorities in bankruptcy: customers and cost cuts.

A team of United executives met yesterday with financial advisers for its unions in Boston. Company representatives said the meetings were intended to set the stage for broader talks with unions in the coming days about management's plans in bankruptcy. Union officials did not immediately comment.

United needs to make steep labor and other cutbacks soon — to emerge healthy from bankruptcy sometime in 2004 as planned and to keep its $1.5 billion interim financing intact by meeting creditors' periodic benchmarks. But it also needs employees' support for the reductions, since labor turmoil could fatally damage its plans.

"We're trying to continue the consensual and collaborative approach that has been displayed over the last several months," United spokesman Joe Hopkins said of the preparatory talks.

Meanwhile, chief executive Glenn Tilton headed west on a tour of United's network at the same time as the airline ran full-page ads in major U.S. newspapers, urging passengers not to give up on United.

Tilton flew from Chicago to Denver International Airport, the airline's two biggest hubs, shaking hands with passengers and employees before heading on to Los Angeles. He planned to fly today to United's other two hubs, San Francisco and Washington-Dulles.

"Thanks for flying United," he said as he shook hands across ticket counters and in passenger queues, sporting a "United Will Stand" button.

Tilton touted the airline's bankruptcy as a challenge that has "galvanized our passengers, our employees and focused attention on what it is that we need to do."

But he reiterated that United will have to cut flights and jobs to meet its goals.

"A successful business model is going to protect jobs," he said. "They're going to be good jobs, they're going to be sustainable jobs. We don't want to come back to this place again."

On Monday, Tilton said that United effectively has two businesses to run now that it is in bankruptcy: "One is the business of our customers ... and the other is the business of the filing. We have two teams working on two separate businesses."

United also issued a statement saying that the federal bankruptcy court's approval Monday of its interim financing will enable it to continue operations as promised.

Chief Judge Eugene Wedoff approved an order giving United access in 11 days to $800 million of a $1.5 billion loan package. Wedoff will rule on whether United gets the balance after creditors and other interested parties have a chance to object. The judge scheduled a hearing on the issue for Dec. 30.

United went into bankruptcy with about $800 million in unrestricted cash.

The interim lending package consists of $300 million in financing from Bank One and a $1.2 billion loan from a group that is led by J.P. Morgan Chase and Citibank and also includes CIT Group and Bank One.