United Delays Release of Bankruptcy-Exit Plan

United Airlines on Tuesday postponed the release of its long-awaited reorganization plan and said it might not exit bankruptcy protection until 2006.

Such a delay would extend to more than three years what is already a record stint in bankruptcy protection by an airline. United has been under Chapter 11 protection for 32 months, and the carrier had been saying it would emerge this fall.

In a joint statement with its committee of unsecured creditors, the USA’s No.2 airline said it won’t release the plan this week as scheduled to give the company and creditors more time “to continue collaborating on and reviewing” it.

The creditors’ committee got the draft plan just last weekend. The plan is expected to be delayed by a month.

United CFO Jake Brace said in an interview that creditors asked for more time. Brace said the delay could push United’s exit into 2006.

Two sources outside the company who have seen the draft plan said creditors are concerned its revenue assumptions may be too high, fuel-cost estimates too low, and the airline’s projection of a profit in 2006 unrealistic.

The Chicago-based airline posted a $48 million operating profit last quarter, but it reported an overall loss of $1.43 billion, mainly because of bankruptcy-related charges.

Two of United’s direct competitors, No.1 American and No.5 Continental, posted profits last quarter.

The delay of the reorganization plan didn’t surprise Wall Street analysts.

“I don’t think anybody thinks United will emerge this year,” said analyst Helane Becker of Benchmark Co. “There are too many questions they can’t answer.”

In Chapter 11 bankruptcy, the release of a company’s reorganization plan and disclosure statement begins the process of exiting. Those documents lay out how the company expects to operate and how creditors will get paid. After release of the plan, approval can take five months or more.

Meanwhile, United continues to wrangle with the owners of about 130 of its 460 jets over aircraft-lease rates. The lessors want United to make good on its original lease rates or return the planes. About 50 planes are at risk of repossession because new rates have not been agreed on.