United Bankruptcy Could Drag Into 2006

CHICAGO (AP) -- United Airlines' more than 2½-year stay in bankruptcy could extend into next year now that its parent company has delayed filing a plan for leaving Chapter 11 protection.

The nation's No. 2 airline had expected to submit the plan Tuesday in U.S. Bankruptcy Court, but said its creditors committee requested more time to review ''the complex, extensive documents.''

United now says it plans to file a Plan of Reorganization and disclosure statement, which together provide a blueprint for the carrier's exit from bankruptcy, in about one month.

The delay likely will push back United's goal of leaving bankruptcy sometime this fall.

''It may be later this year. It may be early next year,'' United spokeswoman Jean Medina said. She said the extra time would result in ''a smoother exit process.''

Carole Neville, an attorney for the unsecured creditors committee, said it continues to review the plan. She declined to discuss how long the process might take.

The committee represents 13 creditor groups, including some bondholders, vendors and unions representing United's pilots, flight attendants and machinists.

The bankruptcy court, along with United's unsecured creditors, lenders and others, must approve the reorganization plan before the carrier exits bankruptcy.

Douglas Baird, a bankruptcy professor at the University of Chicago Law School who has tracked the case closely, said the delay is ''not a big deal'' and shouldn't jeopardize United's bid to exit bankruptcy.

''But the real question remains, when will they have exit financing?'' Baird said.

United has said it received four exit-financing proposals from lenders in the range of the $2 billion to $2.5 billion, which is the amount the carrier estimates it needs. Medina said the company would ''work on firming up financing'' once it completes the reorganization plan.

Management's exclusive right to file a reorganization plan for the company - without the threat of competing proposals - ends Sept. 1, although Judge Eugene Wedoff has granted several extensions in the past.

Baird said he doesn't think Wedoff would strip United's management team of its exclusivity as long as its creditors appear to be working with them on the plan.

But restructuring consultant Bill Brandt said he thinks some creditors are running out of patience and might be interested in seeing other proposals.

''Perhaps freed of the constraints of exclusivity, others in the marketplace could bring resources and fresh ideas about what needs to be done here,'' said Brandt, Chief Executive of Development Specialists Inc., a Chicago-based restructuring and management consulting firm.

Medina said the company is not aware of any competing plans to reorganize the carrier.

Separately, United said Tuesday that it will start selling memberships to its Economy Plus seating section to passengers who aren't among the airline's most loyal frequent fliers.

The seats, which have 3 to 5 inches of extra legroom, now are reserved for United's Mileage Plus ''premier'' fliers or passengers who pay full fare. Under the new program, passengers who pay $299 a year can upgrade to Economy Plus when they book their flight if seats are available.

United, a unit of Elk Grove Village, Ill.-based UAL Corp., has lost $7 billion since filing for bankruptcy in December 2002.

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