United Airlines' bid to come out of bankruptcy in early 2006 took an important step forward Friday when a judge approved the disclosure statement that is a key part of its exit plan.
U.S. Bankruptcy Judge Eugene Wedoff said at the monthly bankruptcy hearing for UAL Corp., United's holding company, that he signed off on the statement Friday morning after the biggest objections to it had been withdrawn.
The disclosure statement details the airline's plans for emerging from bankruptcy and outlines how creditors will be paid.
The Pension Benefit Guaranty Corp., the federal corporation that insures pension plans, had objected to the plan's stipulation that requires a five-year waiting period before it can sell the UAL stock it is to receive as part of this year's settlement with United for terminating its employee pensions.
The pension agency withdrew its objection, as did others, after United agreed this week to make changes to the disclosure statement to accommodate those concerns.
Wedoff on Friday also formally approved United's exit financing, a $3 billion all-debt package led by JPMorgan Chase & Co. and Citigroup Inc.
Chief Financial Officer Jake Brace told reporters afterward that the Elk Grove Village, Ill.-based company still has work to do to meet its goal of emerging from bankruptcy on Feb. 1, including resolving remaining issues with the creditors committee, the PBGC and others and finalizing aircraft financing.
However, he said: "We're on track to exit in February."
The nation's No. 2 airline and its competitors alike will benefit from the recent decline in fuel prices, with oil dipping below $60 a barrel Friday for the first time in three months. Brace welcomed the price drop but said he's "not going to do a victory lap" just yet, since United's business plan for after bankruptcy is based on prices averaging $50 a barrel starting next year.
Asked about discount rival Southwest Airlines Co.'s announcement that it will resume service next year in Denver International Airport, a major hub for United as well as Denver-based Frontier Airlines Inc., Brace said he welcomes the competition.
"We've been competing with Southwest for almost 30 years," he said. "We look forward to taking our customers to the 800 or so destinations that they don't fly to."
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