United Gets Bankruptcy-Plan Extension

CHICAGO — A judge gave United Airlines two more months on Friday to devise its own bankruptcy reorganization plan but warned there will be no further extensions unless there are “unforeseeable circumstances.”

Granting the 10th such extension in UAL Corp.’s nearly three- year bankruptcy overhaul, Judge Eugene Wedoff said he doesn’t intend to give United any longer than Nov. 1 to put together a plan because all major issues have been resolved.

United attorney James Sprayregen said it is the “hope and goal” of the airline to file the reorganization plan in early September. The company is targeting a late 2005 or early 2006 exit from Chapter 11 bankruptcy, which it entered in December 2002.

The extension, which prevents outsiders from submitting rival reorganization plans to the court, was granted a day after UAL said it had secured commitments for up to $3 billion in debt financing from banks willing to back its exit plan.

The loan from Citigroup Inc., JPMorgan Chase & Co., General Electric Co. and Deutsche Bank AG would enable UAL to pay off a $1.3 billion interim financing loan and provide operating cash for after bankruptcy.

Chief Financial Officer Jake Brace said United, based in Elk Grove Village, Ill., has largely resolved the lengthy dispute with its lenders over renegotiated aircraft lease prices. The sides agreed earlier this month on terms for 105 of 119 disputed jets, with transactions for the rest still pending.

Brace said that while a continuing rise in the price of oil would hurt all airlines, United now has the lowest cost structure of any traditional carrier thanks to its restructuring.

United’s financial progress has been evident this summer, though it remains in the red because of heavy restructuring expenses. In its monthly bankruptcy financial update, United reported Thursday that it would have made $76 million in July without restructuring costs, mostly from renegotiating plane leases.

“They made a little money the last two months, but June and July do not a year make,” said Robert Mann, an airline consultant at R.W. Mann & Co. in Port Washington, N.Y. “But they’ve at least stabilized it to the point where it’s not bleeding a lot.”