United's CEO predicts profit in 2006

June 4, 2005
ASSOCIATED PRESS

CHICAGO -- United Airlines will not only leave bankruptcy in the fall but will turn a profit in 2006, airline CEO Glenn Tilton predicted in a newspaper interview.

Recent labor agreements will save the company $700 million, but other strategies must be employed in the face of rising fuel prices, Tilton told the Chicago Tribune for a report in Friday's editions.

He said the airline's cash balance of $2.4 billion is encouraging, despite the fact that the company has lost more than $1.2 billion so far this year.

"The next chapter of our lives is to make good on the investment that our employees have made and to compete with the financial resilience that we've created for ourselves," Tilton said.

The carrier, a unit of Elk Grove Village, Ill.-based UAL Corp., will need to secure $2 billion to $2.5 billion from banks to finance its planned exit from Chapter 11.

Tilton said he's convinced the airline will have no trouble finding lenders if its business plan succeeds.

"We find ourselves in a position to be selective in securing the financing that is most appropriate and properly priced for exit financing," he said.

The airline has talked with four potential lenders, Citibank, JPMorgan Chase & Co., Deutsche Bank and GE Commercial Finance, the newspaper reported.

Some industry observers doubt United will succeed in its quest to emerge from bankruptcy this year.

Airline analyst Michael Boyd said he believes a spring 2006 exit is more likely.

UAL has lost $6 billion since entering Chapter 11 bankruptcy in December 2002.

File this under I'll believe it when I see it.

What else is going to say to the Street and to employees that have been financially mauled? As CEO, it's all he can say if there is any hope to get exit financing. He and his managment "team" have few costs left to cut - now it's time actually run an airline - something they really don't have a track record of doing outside the court's protection.

I think he needs a drug test.