NEWS: United Airlines Gets a Break on Debt, Looks for Fall Bankruptcy Exit

The bankruptcy court has approved a change in the debtor in possesion financing for United Airlines. A debtor is possession is what you become when a company that owes you a bunch of money goes bankrupt. You sign up with the bankruptcy court and hope that you are going to recover some of that money. The debtor in possesion list for United Airlines includes some pretty big name like JPMorganChase, Citigroup, CIT and GE Capital. This change in financing is significant on at least two fronts. First, United gets an extension on when they repay their loans from June 30 2005 to Sept 30 2005. Second, they get a lower interest rate on the loan. Other changes include waiving the January earnings benchmark and lowering the minimum cash requirement from $750 million to $600 million. All of this ties to United Airline's other announcement today. They are looking to exit bankrupcty this fall...just a mere 3 years after entering bankruptcy

No one can ever say that United Airlines has not been afforded every opportunity to pull themselves away from the abyss. I mean seriously, three years in bankruptcy! Despite all of the brave faces and posturing at United I still believe they are likely to liquidate. United's CEO has also been talking about mergers this week saying that he expects to see some. I agree and it may be that United would be in this position, though I see them as the target of a merger...not the one doing the merging. It'll be much the same as American absorbing TWA.