CHICAGO (AP) -- Investors reacted optimistically Monday to United Airlines' tentative cost-cutting agreement with flight attendants, pushing the carrier's stock higher despite analysts' renewed predictions of a bankruptcy filing.þþShares in United parent UAL Corp. rose 29 cents, or 9 percent, to close at $3.57 on the New York Stock Exchange after initially shooting to $3.85.þþUnited said the agreement for $412 million in wage concessions from its 26,000 flight attendants over 5 1/2 years is in line with the airline's plan to achieve $5.8 billion in labor cutbacks. It already had announced plans last Friday to lay off 2,700 more flight attendants because of its reduced flight schedule next year.þþ``This is indeed another very significant step in the company's efforts to successfully restructure out of court,'' chairman and CEO Glenn Tilton said Monday in a taped message to employees.þþTwo critical issues remain unresolved, however: whether the airline's 36,000 machinists will agree to significant cost concessions, and whether the overall cuts will be enough to gain a much-needed $1.8 billion government loan guarantee.þþAs United officials headed for more meetings on Monday and Tuesday with the Air Transportation Stabilization Board about their application, Wall Street analysts expressed doubt about the depth of the airline's proposed cost reductions.þþJamie Baker of J.P. Morgan said the lowered wages and other cutbacks won't significantly reduce United's high cost structure, as the government panel has demanded. Baker also said the cash-tight carrier hasn't provided convincing evidence that sinking revenues will recover, even as it continues to lose millions of dollars a day.þþ``With an ATSB decision reportedly weeks away, the clock isn't merely ticking, it has begun to chime,'' Baker said in a note to investors.þþJames Higgins of Credit Suisse First Boston said the pilots' actual pay cuts will improve UAL's cash flow by $1.22 billion, or just 55 percent of the $2.2 billion total.þþ``Everything we see in this glimpse at a key piece of UAL's loan (guarantee) application suggests a low probability that the ATSB will grant approval,'' Higgins said. The analyst reiterated the widely shared belief that a Chapter 11 bankruptcy filing is ``by far the most likely outcome.''þþUnited faces a Dec. 2 deadline for the repayment of $375 million in aircraft-backed loans, as well as a $70 million payment to the machinists union for retroactive wages due Dec. 15. It has warned of a bankruptcy filing if it doesn't get the government loan guarantee.þþ
Source: NY Times
