United CEO says bankruptcy not inevitable
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Bankruptcy might be a distinct possibility for United Airlines, but it is not inevitable, according to its new chief executive. Glenn Tilton’s success or failure in avoiding a Chapter 11 filing could hinge on the support of unions at the world’s No. 2 carrier — a reality Tilton acknowledged Wednesday by speaking to a meeting of union leaders just an hour after arriving in Chicago. Union leaders remain uneasy about the proposal by Tilton’s predecessor to slash labor costs by $1.5 billion annually in a bid to make United more cost-efficient and competitive. But union spokesmen said they appeared to be pleased by the new CEO’s diplomacy and comments in a brief courtesy visit. Pilots spokesman Herb Hunter said union president Paul Whiteford came away from the meeting convinced Tilton wants to avoid bankruptcy. Reinforcing that view, Tilton told reporters a bankruptcy filing is “not a foregone conclusion.” But, he added, “the possibility exists in the circumstances the company finds itself in.” While calling it premature to talk about specifics of a financial recovery plan, he made clear he doesn’t think the severe labor cuts sought by his predecessor last week were out of line. Newly retired CEO Jack Creighton, who appeared with Tilton at Wednesday’s union meeting, proposed last Wednesday that labor costs be trimmed by about 21% as the key element of $15 billion in company cutbacks over six years. “Those weren’t my proposals,” Tilton said after leaving the meeting at the pilots’ union office near United headquarters. “But from the perspective of management, they were reasonable.” The meeting was the first involving all union leaders in eight years, reflecting the dire condition of an airline that has lost $3 billion since 2000. Several union leaders contend that the $1.5 billion a year in labor cuts are more than what’s needed to help United obtain a $1.8 billion federal loan guarantee, which it says is critical in order to pay looming debt obligations and avoid a bankruptcy filing this fall. Tilton, who flew in from San Francisco, where he had been vice chairman of ChevronTexaco Corp., said it was his idea to attend the meeting. He was named the airline’s CEO on Monday. Asked to describe the urgency of United’s situation, Tilton said, “The urgency is extreme.” |