United Files for Bankruptcy Protection

CHICAGO (AP) – United Airlines made the largest bankruptcy filing in aviation history Monday, saying it was the only way to keep the world’s No. 2 airline flying after two years of heavy losses.

The Chapter 11 filing was the fifth-largest ever as measured by assets. The suburban Chicago-based company has lost $4 billion in the last two years due to a slumping economy, flawed business strategies and the Sept. 11 terrorist attacks. It faced debt payments of $875 million later this week.

“We’re in control of United’s destiny,” United CEO Glenn Tilton said in a telephone interview. “We’ve made a good decision for United. It is in fact Chapter 1. … This is a tremendous opportunity for United to transform this company and to emerge stronger than ever.”

Tilton told customers and employees at O’Hare International Airport that the carrier would keep flying. “We are now going to take this occasion to create a new beginning for United,” he said.

Tilton said he expects the bankruptcy process to be completed within 18 months.

At a bankruptcy hearing at 7 a.m., Chief Judge Eugene R. Wedoff issued orders allowing United to keep operating until another hearing Monday when he is to issue further orders allowing the airline to continue its operations.

United said it obtained $1.5 billion in financing from several banks to continue operating. The airline said it has $800 million cash on hand.

The airline has promised to keep flying while it sheds costs under the auspices of a bankruptcy judge and overhauls its business plan to try to become profitable again. As of Monday’s filing, United had assets of $22.8 billion and liabilities of $21.2 billion, the company said.

United operates about 1,700 flights a day, or about 20 percent of all U.S. flights. It has the most extensive worldwide route structure of any airline.

The bankruptcy filing will come at a steep price for the 83,000 employees who own 55 percent of the company. A bankruptcy court judge is almost certain to order wage and job cuts and could dissolve the employee stock ownership plan.