Chicago – United Airlines’ reorganization plan was approved Friday after three tumultuous years in Chapter 11, paving the way for the airline to emerge from bankruptcy in early February.
“If there’s not a feeling of exaltation in this room, perhaps there can be a feeling of relief,” U.S. Bankruptcy Judge Eugene Wedoff told people in his courtroom Friday morning.
“Certainly not everyone can be completely happy,” Wedoff said. United’s stock will be canceled, some employees have lost jobs, and others have taken concessions.
But, he noted, three years ago United was “in danger of dying.” Today “it has the potential to be a profitable investment, a reliable business partner and a stable employer. … The bankruptcy system merely provided the framework.”
The outcome is the result of the “hard work, creative thinking, willingness to compromise and willingness to accept a less-than-ideal result” of all parties involved.
Wedoff said he has been asked by couples to preside over weddings. At first that seemed odd, since his specialty is bankruptcy, not matrimony. Now he sees wisdom in their choice.
“With its emphasis on cooperative effort to find the best solution to the resulting problems, (bankruptcy) is an entirely appropriate way to set out on a new beginning,” he said.
Denver lawyer Douglas Jessop described Friday’s decision as “an extremely positive development for the city and for United.”
“They are now in a position to focus on the business and not just the bankruptcy,” he said. “It just allows them to get onto the next level of competing in an incredibly intense market.”
Jessop has been representing Denver International Airport in the United bankruptcy case.
The airline will now have a 10-day waiting period, during which time appeals can be filed and banks that are providing $3 billion in exit financing can weigh whether any appeals affect their decision to fund the exit.
Monday is the deadline for banks to commit to participate in the financing.
In a message to employees Friday, chief executive Glenn Tilton thanked them for their hard work and said competitors are “likely concerned.”
The airline is fortunate to be emerging as airfares are rising, which could bring in more revenue, said airline consultant Darryl Jenkins.
“They’re also coming out at a time when jet fuel is pretty darn expensive, so they’ve got some real challenges ahead,” Jenkins said. “I hope they spend all of their time trying to be a world-class airline again (instead of) thinking about mergers, which they’ve done once before.”
United’s attempt to merge with US Airways failed in 2001 after antitrust regulators raised concerns.
United plans to distribute its new stock to creditors after it emerges from bankruptcy. It will announce shortly where that stock will be listed, saying it has been approved by both Nasdaq and the New York Stock Exchange. United’s chief financial officer, Jake Brace, said the airline expects to exit bankruptcy and be trading very early in February.
A major issue in Wednesday’s confirmation hearing was unions’ objections to a plan that allocates 8 percent of new shares for management.
Wedoff overruled the objections.
The International Association of Machinists said Friday that it still believes all United Airlines employees should participate in the same bonus plan, adding, “Shared sacrifice should result in shared reward.”
Greg Davidowitch, master executive council president of the Association of Flight Attendants at United, said he is “glad it’s over.”
“We’re looking forward to a new United Airlines,” he said. “It’s been a long 37 months.”
Staff writer Kelly Yamanouchi can be reached at 303-820-1488 or kyamanouchi@denverpost.com.
