http://biz.yahoo.com/rb/030829/airlines_united_12.html

Reuters
United Airlines Delays Bankruptcy Exit
Friday August 29, 5:12 pm ET
By Kathy Fieweger

CHICAGO (Reuters) - United Airlines parent UAL Corp. (OTC BB:UALAQ.OB) said
on Friday an uncertain industry outlook led it to abandon plans to exit
early from bankruptcy, and it now aims to emerge in the first half of 2004.

Executives including Chief Executive Glenn Tilton and Chief Financial
Officer Jake Brace had recently indicated that the world's second-largest
airline might exit from Chapter 11 much earlier than the 18 months
originally projected last December, when UAL filed the largest bankruptcy in
aviation history.

UAL bankruptcy attorney James Sprayregen said at a court hearing the company
will submit an updated business plan to the Air Transportation Stabilization
Board, but gave no timeframe.

"It still remains to be seen whether the revenue recovery will be short- or
long-lived," Sprayregen said.

Kevin Mitchell, chairman of the Business Travel Coalition and a critic of
United's tactics, said of the once-again rejigged timetable: "On one level,
it's yet another data point of United's going from here to there."

Unit revenue for the industry increased 8.1 percent in July, boosted by a
pick-up in summer travel, after improving for a couple of months. But many
industry observers worry about how airlines will fare once demand tapers off
after the U.S. Labor Day holiday on Monday.

Mitchell said airline revenue "is going to remain anemic through a major
portion of 2004."

Aaron Gellman, a professor at Northwestern University's Transportation
Center, said the statements about revenue uncertainly were legitimate.

"I believe that the revenue environment in the airline industry is very
uncertain," Gellman said. "Both as to the amount (fares cost) and the
structure."

United is working closely with the ATSB to replace those aspects of the
company's original loan guarantee bid that were rejected as inadequate in
December. It has been firming its application around a plan that would rely
on substantial cost savings and strategies to boost revenue and capture
business travel. But public details remain sparse.

The company's retooled application would include $2.5 billion in labor
concessions and related work rule savings over the next six years, more than
$700 million in savings from renegotiated aircraft leases and other
mortgages that are close to being finalized, and a new revenue outlook.

MIXED SIGNALS

United's Tilton has given conflicting signals on the timing a bankruptcy
exit, but in recent weeks expressed a strong desire for emerging early next
year to take advantage of spring travel. US Airways timed its March 31
bankruptcy exit the same way this year, emerging in just eight months.

A number of issues in the United bankruptcy need to be resolved, including
contributions to pension plans, Sprayregen said. One involves pension
contributions that would require a significant portion of the airline's cash
flow going forward.

A range of options are being studied, he said.

United has four separate pension plans, which are underfunded by at least $6
billion, according to recent documents filed with the U.S. Securities and
Exchange Commission.

The uncertainty regarding United's business relationship with Atlantic Coast
Airlines (NasdaqNM:ACAI) and municipal bond litigation are other outstanding
issues, along with a special provision of the bankruptcy code known as
Section 1110, which deals with the rejection of various aircraft leases.

Moody's Investors Service late Thursday lowered the ratings on some United
debt backed by aircraft. The agency said it downgraded certain Equipment
Trust Certificates and Enhanced Equipment Trust Certificates due to
uncertainties about sufficient cash flow and increased potential for
principal loss to debt holders.

"All of these issues and others are highly relevant to United's business
plan," Sprayregen said.

Sprayregen said United will soon submit a court motion to extend the period
in which the company has exclusive rights to file its reorganization plan.

(Additional reporting by John Crawley in Washington and Meredith Grossman
Dubner in Chicago)