|
Case
| HBS Case Collection
|
2006
(Revised from original 2005 version)
UAL, 2004: Pulling Out of Bankruptcy
by
Daniel Baird Bergstresser, Kenneth A. Froot and Darren Robert Smart
|
Abstract
UAL is a large air transportation company with roots that go back to the 1920s. As a legacy carrier, going back to before the 1978 deregulation of air transportation markets, United Airlines is burdened with cost structures that make it difficult to compete with newer competitors. In addition, UAL has the burden of $7.6 billion in unfunded pension obligations and $2 billion in unfunded retiree health obligations. In June 2004, UAL is still operating under Chapter 11 bankruptcy protection, which began December 2002. It has needed extensions of the exclusivity period from the bankruptcy court. UAL's plan of reorganization is predicated on receiving $1.8 billion in loan guarantees from the Air Transport Stabilization Board (ATSB). But its request for loan guarantees from the ATSB was recently rejected. The company must decide what to do next and how to emerge from bankruptcy.
Keywords: bankruptcy;
compensation;
costs;
loans;
reorganization;
Air Transportation;
Insolvency and Bankruptcy;
Restructuring;
Financing and Loans;
Compensation and Benefits;
Air Transportation Industry;
United States;
Citation:
Bergstresser, Daniel Baird, Kenneth A. Froot, and Darren Robert Smart. "UAL, 2004: Pulling Out of Bankruptcy." Harvard Business School Case 205-090, June 2006. (Revised from original February 2005 version.)