BusinessBusiness RecoveryDebt-ridden United Airlines files for Chapter 11

Debt-ridden United Airlines files for Chapter 11

UAL, the parent company for United Airlines, the world's second biggest airline, has filed for Chapter 11 bankruptcy protection after being unable to pay debts worth $1bn, which became due this week.

Link: United Airlines fights to remain solvent

The bankruptcy filing, which will protect the company from creditors and give it time to restructure, was made today in a bankruptcy court in Chicago.

In a statement, UAL said it would be able to continue its global operations, while it puts together a plan to address ‘debt, capital and cost structures’.

The company said all current and future tickets would be honoured, as well as code-sharing agreements and customer programmes such as its Mileage Plus programme.

As part of its filing, the company has arranged $1.5bn debtor-in-possession financing, which will allow it to operate while restructuring.

UAL named the events of 11 September 2001 as leading to ‘significant financial and operational challenges’ resulting in significantly reduced revenues.

Chairman Glenn F. Tilton said: ‘During the Chapter 11 process, we will go further and deeper in our efforts to reduce our costs. We are developing a very compelling plan of reorganization that will enable us to successfully emerge as a stronger company with a competitive cost structure. It is our goal to complete this process within 18 months. I am confident that we can restore profitability and reestablish United as the world’s premier global carrier. Our best days are ahead of us.’

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