United Airlines bankruptcy (2002)
From Invertopedia, the encyclopedia of how things fail
United Airlines, the world's No. 2 carrier, filed for Chapter 11 on December 9, 2002, the largest airline bankruptcy in US history at that point[1][2]. It had lost $4 billion in the previous two years and faced debt payments of $875 million that week[1]. It listed assets of $22.8 billion and liabilities of $21.2 billion[1], and it left bankruptcy in 2006[3].
What happened
| 2000 | To resolve labor disputes, United gives pilots a 28% raise, the largest at that time.[3] |
|---|---|
| 2001 | Domestic passenger revenue drops 30% per month.[3] |
| Dec 9, 2002 | United files for Chapter 11 after being spurned in a plea for federal assistance. It says it has $1.5 billion in bank financing and $800 million in cash.[1][2] |
| 2004 to 2005 | Staff is cut to 62,000 and the employee pension plan is eliminated in 2005.[3] |
| 2006 | United emerges from bankruptcy.[3] |
The kill shot
United entered the downturn after giving pilots a record raise, lost its revenue after 9/11 and was refused federal help.
The company said it was losing between $20 million and $22 million a day that month[1]. AP reported that United, spurned in a plea for federal assistance, would file[2]. Airways Magazine pointed to the 2000 pilot raise and the drop in passenger revenue, and noted staff cuts from 100,000 before 9/11 to 62,000 in 2004[3].
References
- ^ “United files for bankruptcy”. Associated Press via Indiana Daily Student, Dec 10, 2002. Filing, losses, balance sheet, daily loss rate, financing.
- ^ “United Airlines to declare bankruptcy today”. Associated Press via Lawrence Journal-World, Dec 9, 2002. Context for the filing.
- ^ “12/09/2002: United Airlines Files for Chapter 11 Bankruptcy”. Airways Magazine, Sep 12, 2023. Causes, job cuts, pension, exit in 2006.