UAL Corp, parent of United Airlines Inc, filed the largest airline bankruptcy in history amid record losses and a travel slump that left the world's second-biggest airline struggling to pay its debts.
UAL, which was denied a US$1.8 billion US loan guarantee last Wednesday, had been preparing for a Chapter 11 filing for months.
PHOTO: AP
United Airlines Taipei office said in a statement that its reorganization in the US will not affect its ability to continue operations in Taiwan, the US or the rest of the world.
The Chicago-based carrier has negotiated with employee unions to win US$5.2 billion in labor-cost savings.
The company filed the petition in Chicago, according to the Northern District of Illinois bankruptcy court Web site.
United is the second major US air carrier to seek bankruptcy protection since the Sept. 11 terrorist attacks, after US Airways Group Inc's filing in August. UAL listed US$24.2 billion in assets in an October regulatory filing, making its Chapter 11 case the seventh largest ever.
UAL was pushed to the edge of bankruptcy when the federal Air Transportation Stabilization Board rejected the loan guarantee as "not financially sound."
UAL can submit a new plan to the loan-guarantee board or seek a guarantee as part of a Chapter 11 restructuring, Daniel Montgomery, the board's executive director, has said.
UAL said Dec. 2 it would delay repayment of US$920 million in debt while awaiting a decision on its loan-guarantee request. US bankruptcy law automatically blocks debt-collection efforts, lawsuits and other actions against UAL. The legal protections and court-supervised recovery process would give the airline a chance to change strategies and fix mistakes. In a Chapter 11 reorganization, UAL can cut costs by abandoning expensive aircraft leases, renegotiating labor contracts and paying debts with new equity.
UAL shares have lost 93 percent of their value since the beginning of the year.
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