Ruling on UAL Loan Guarantee Imminent
A ruling is expected any day on United Airlines’ application for a $1.8-billion federal loan guarantee.
The airline’s parent, UAL Corp., says it needs approval to secure $2 billion in private loans. Without the loan guarantee, United has said it would have no choice but to file for Bankruptcy Court protection.
Over the weekend, United and its mechanics union met behind closed doors as the nation’s No. 2 carrier pressed for hundreds of millions of dollars in cost cuts.
The mechanics last week rejected a package of steep wage and benefit cuts that United says are necessary if it is to land the federal loan guarantee.
United spokesman Jeff Green confirmed the meeting but said the airline would not discuss any aspect of the talks.
The meeting came a day after the airline’s 24,000 flight attendants agreed to $412 million in wage concessions. However, that deal and other cost-cutting agreements accepted by United’s pilots and other employee groups will expire Dec. 31 unless the mechanics sign on.
United is seeking $5.2 billion in companywide labor cuts over 5 1/2 years. The mechanics’ proposed share is believed to be $600 million to $700 million.
The cash-strapped airline also must decide whether it can make a $375-million debt payment today, although under a grace period it could push that deadline to Dec. 16. Its cash reserves are believed to be about $1 billion and on a pace to run out this winter.
