United Air Lines still faces a variety of objections from creditors before it can emerge from bankruptcy, but its chief financial officer said Friday that the airline expects to work out those differences.
CFO Jake Brace said United, a unit of UAL Corp., will resolve the objections either consensually or through litigation at a hearing next month, to stay on schedule for exiting from bankruptcy in February.
Earlier, at a monthly omnibus hearing in the U.S. Bankruptcy Court for the Northern District of Illinois, Judge Eugene Wedoff approved some supplemental financing for United to come out of bankruptcy and extended the time period for creditors to vote on the exit plan.
The court also cleared the way for the second-largest U.S. airline to gain possession of 14 leased aircraft.
The judge said United is on track for a final confirmation hearing of its bankruptcy emergence plan on Jan. 18 and 19.
This week, unsecured creditors joined United's flight attendants and machinists unions in objecting to a proposed stock plan for management worth $285 million, or 15 percent of shares in the reorganized airline.
The plan would disburse 10 million shares of UAL stock when the airline comes out of bankruptcy and the rest at a later date. Creditors said the awards wouldn't be tied to any performance measures.
The United branch of the Air Line Pilots Association also assailed the executives' "stock grab" Friday, calling it "excessive and insensitive in light of the substantial wage and benefit reductions sustained by the pilots during the reorganization."
Responding to the criticism, United spokeswoman Jean Medina called incentive plans standard business practice and said the equity incentives are consistent with United's intentions to tie a substantial portion of senior management's compensation to the performance of the stock.
The judge tweaked the court schedule to make time for United to provide expert testimony on the plan and for creditors' attorneys to review it.
Brace said details of the compensation plan haven't been fully worked out, but that United would try to resolve objections in talks with its creditors' committee. United expects by Dec. 30 to have the results of a creditor vote on its reorganization plan.
Elk Grove Village, Ill.-based United filed for Chapter 11 protection in December 2002. This fall, the court approved United's business reorganization plan. The airline secured more than $3 billion of debt financing and crafted a plan showing how it expects to make a profit, competing successfully with low-cost airlines.
United said its current stock will become worthless when the reorganization plan goes into effect.
Shares of UAL closed at 69.5 cents in over-the-counter trading Friday, up 6.1 percent from 65.5 cents Thursday.
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