NEW YORK (AP) -- The chairman and chief executive of United Airlines, John Creighton, said the nation's second-largest carrier will apply for a loan guarantee from the federal government by the June 28 deadline if it receives unspecified concessions from workers.þþCreighton said the airline has already made ``considerable headway in securing employee commitments'' but that the negotiations, which have been going on for several weeks, have taken longer than anticipated.þþ``We expect to see substantial participation by United's employees,'' Creighton said during a prepared speech at a Merrill Lynch conference in New York. ``If that in fact occurs, we will apply for federal loan guarantees.''þþIf recent history is any lesson, though, United could apply for the federal loan assistance without finalizing the desired concessions from employees. US Airways of Arlington, Va., did just that on Monday, when it asked the federal government for $900 million in loan guarantees in order to avoid bankruptcy.þþCreighton said the survival of United ``is not in doubt,'' regardless of whether it receives the loan guarantees.þþA component of the airline bailout package passed by Congress after Sept. 11 made $10 billion in loan guarantees available to airlines that could meet stringent financial criteria. Applicants must submit a detailed restructuring plan to the Air Transportation Stabilization Board to demonstrate their ability to repay the loans.þþUnited, which lost $510 million in the first quarter and continues to lose millions of dollars aday, would be the third major airline to seek a portion of the federal loan guarantees.þþRich Bittenbender, an airline analyst at Moody's Investors Service in New York, said cash -- even if it is borrowed -- will be ``critical'' for United and other carriers as they mount a recovery from Sept. 11 and a sharp downturn in spending by business travelers.þþ``You really need the liquidity to stabilize the company,'' said Bittenbender.þþCreighton said United has discussed the issue with unions representing pilots and machinists as well as with the company's officers and non-union employees.þþA spokesman for the International Association of Machinists and Aerospace Workers, United's biggest union, said there have been ``ongoing discussions'' between the union and the airline about the recovery plan but no agreement. He declined to characterize any progress that has been made in the talks.þþ``Any proposed changes to the existing labor agreements would go to the members, and we're not at that point,'' Frank Larkin, the spokesman, said.þþUnited's most powerful employees group, the Air Line Pilots Association, said in late April it would work with the airline to develop a recovery program and would discuss reducing labor costs as part of a ``solid business plan.'' But ALPA spokesman Steve Derebey, a United 767 captain, said Wednesday that progress in talks since then has been ``very, very slow'' and that ``significant obstacles'' remain.þþ``Concessions is not a word we use, simply because it gives the connotation we're going to give something in return for nothing and something that will never come back, and that is not the case,'' Derebey said. ``We are willing to work with the company on a recovery program in return for something of value.''þþThe union representing United flight attendants has refused to participate in recovery talks, citing the fact they are paid only industry-average wages -- unlike other employee groups at United that have recently been boosted to industry-leading pay.þþ``If they're talking about problems with labor costs, our costs are competitive,'' said spokeswoman Dawn Deeks of the Association of Flight Attendants. ``We're not the problem.''þþOn Monday, US Airways said it needed to borrow $1 billion in order to prevent bankruptcy. It has asked the government to back 90 percent of those loans.þþThe application included management's plans to reduce costs by seeking concessions from its vendors, lenders and employees. The airline has said it plans to reduce costs by $1.2 billion annually, with $950 million coming from employee concessions. Negotiations with those groups are incomplete.þþUS Airways wouldn't discuss all the specifics of its application, but it likely gives the government the option to purchase a certain number of shares in the airline, letting it profit from the deal if US Airways gets back on its feet and its stock price recovers.þþAmerica West Airlines of Phoenix received $429 million last year in federal loan guarantees.þþIn late afternoon trading, shares of UAL Corp., United's parent, were up 6 cents to $11.44 on the New York Stock Exchange.þþ
Source: NY Times
