United Airlines preparing for Chapter 11 bankruptcy filing

Airline Industry Information, Dec 6, 2002

AIRLINE INDUSTRY INFORMATION-(C)1997-2002 M2 COMMUNICATIONS LTD

United Airlines is reportedly preparing for bankruptcy after the Air Transportation Stabilization Board (ATSB) rejected its loan application.

Bankers, lawyers and consultants are said to be preparing documents for the airline to file for Chapter 11 bankruptcy protection, which is expected to occur at the weekend. Shares of the carrier's parent company, UAL Corp, reportedly opened 59% lower at USD1.28 - their lowest level in more than 40 years - before the New York Stock Exchange halted trading in the stock.

In a bid to help United Airlines, German carrier Lufthansa is holding talks on offering assistance to its partner. No final decision has been taken as yet, however if the carrier did step in, it would want any financial investment to be secured on assets such as aircraft or real estate.

Meanwhile, key lawmakers and some industry insiders are claiming that the ATSB - created to help airlines struggling financially after the 11 September 2001 terrorist attacks - is too stingy with aid, and are questioning whether the board is performing as Congress planned.

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