United Airlines Hopes For Blue Skies

11 May 2004

United Airlines believes it can come out of bankruptcy, if it can secure a £1.6 billion (€1.3bn; £0.9bn) US government loan.

The world's second largest airline has just posted the industry's biggest first quarter loss.

However finance director, Jake Brace, says the carrier has a revised business plan which it intends to file with the US bankruptcy court in June.

The airline has already cut costs by nearly $5bn and clearly believes that despite rising fuel prices its revised plan will work.

United's claims have been met with scepticism in some quarters where there is a belief the airline will find it very difficult to repay such a huge loan.

They cite the case of US Airways. Despite using a $1bn government loan which enabled it to come out of bankruptcy the carrier has just warned it faces severe financial problems.

United was forced to file for Chapter 11 bankruptcy two years ago after being hit, like many other carriers, by the aftermath of September 11 and competition from low-budget airlines.

Data sourced from: Financial Times; additional content by WARC staff