Wednesday, June 15, 2022
HomePopularHas United Airlines Filed For Bankruptcy

Has United Airlines Filed For Bankruptcy

United Airlines Files For Bankruptcy

Virgin Atlantic files for bankruptcy in U.S | Aviation sector | Markets

United Airlines filed for federal bankruptcy court protection today, reeling from two years of heavy losses and unable to pay off nearly $1bn in debt that comes due this week.

The Chapter 11 filing in US bankruptcy court in Chicago is by far the largest airline bankruptcy ever. The suburban Chicago-based company has lost $4bn over the past two years due to a slumping economy, flawed business strategies and last year’s terrorist attacks.

The airline has promised to keep flying while it sheds costs under the auspices of a bankruptcy court judge and overhauls its business plan in an attempt to become profitable again.

Chapter 11 bankruptcy frees a company from the threat of creditors’ lawsuits while it reorganises its finances. The debtor usually retains control of the business and its assets.

As the second largest airline in the world, United operates about 1,700 flights a day and around 20% of all US flights. It has the most extensive worldwide route structure of any airline. While the bankruptcy will probably have no immediate effect on passengers, protection from creditors will come at a steep price for the 83,000 employees who own 55% of the company. A bankruptcy court judge is almost certain to order wage and job cuts and could dissolve the employee stock ownership plan.

A spokesman for United’s pilots union yesterday urged passengers not to abandon the airline during a bankruptcy filing.

The Day That 4 American Legacy Carriers Went Bankrupt

From the archives | This article was originally written and published on January 25, 2019.

Delta, Northwest, US Airways and United Airlines carried half of the passengers in the United States. All 4 of them were also operating under the protection of Chapter 11, just not to get dissolved by creditors. But how did it get to this point, that 4 of the biggest 6 American airlines were in such dire financial straits?

Well, long story short, a lot of factors contributed to that fact. 2005 for the airline industry was the time, where anything that could have gone wrong literally went wrong.

If youre here for the long story, well then strap in! Because were going to take it step by step and analyze each individual case for every airline. Then, we will try to sum up why did things go so south.

Airline Casualties Due To Coronavirus

LATAM: So far, the largest airline to crash because of coronavirus is Chiles LATAM, which filed for U.S. bankruptcy protection in May due to the pandemic. LATAM says it will continue flying as it restructures its debts in bankruptcy court.

Avianca Holdings: The second-largest carrier in South America,;Avianca survived the Great Depressionbut not coronavirus. The airline filed for Chapter 11 bankruptcy protection in May. Like LATAM, Avianca will continue flying during the restructuring.

Virgin Australia: After almost 20 years of operation,;Virgin Australiathe countrys second-biggest airlinefiled for;voluntary administration, the equivalent of bankruptcy restructuring. Its the largest airline to collapse in Australian history. The private equity group Bain Capital recently agreed to buy the airline for an undisclosed sum; its future remains unknown.

Flybe aircraft are pictured on the tarmac at Exeter airport in England, following the news that the … airline had collapsed into bankruptcy.

Flybe: The British regional airlineFlybe;was struggling before coronavirus and even the UK government and Virgin Atlantic tried to save it. But no luckthe airline entered voluntary administration, similar to bankruptcy, in March. Staffers lost their jobs overnight.

READ MORE: Coronavirus Travel: This Country Wants To Charge You $3000 To Visit

Many airlines have folded or declared bankruptcy due to coronavirus. Here’s what it means for you.

Getty

Don’t Miss: How Many Bankruptcies Has Donald Trump

Philippine Airlines Files Bankruptcy As Travel Fallout Rises

— Philippine Airlines Inc. filed for Chapter 11 bankruptcy in New York with a lender-supported plan that helps the countrys main carrier recover after the pandemic devastated global travel.

The company aims to cut $2 billion in borrowings through a proposed restructuring plan, which needs court approval, it said. Philippine Airlines will also get $505 million in equity and debt financing from its majority shareholder, as well as $150 million of debt financing from new investors. The carrier said it has support agreements from 90% of its lenders.

The restructuring plan will allow the carrier to reduce its fleet capacity by 25%, it said. The recovery plan will allow the airline to return at least 20 aircraft, the companys management said in response to a Bloomberg News query. Philippine Airlines also cut 35% of its workforce early this year.

Chapter 11 lets a company continue to operate while it restructures. The filing on Friday comes after the airline spent months negotiating with its stakeholders. Billionaire owner Lucio Tan called the filing a major breakthrough for the carrier. The carrier will also complete a parallel filing for recognition in the Philippines under the insolvency and rehability law, it said in a statement.

Read More: Airlines in Philippines Seek Credit Aid as They Fight to Survive

The company also received government support for being a partner of the state in the pandemic response, it said.

More stories like this are available on bloomberg.com

United Airlines Posts $19 Billion Loss In Pandemic

UNITED STATES: LATAM AIRLINES FILES FOR BANKRUPTCY

United Airlines said Wednesday that it finished one of the worst years in its history by losing $1.9 billion in the last three months of 2020, and it predicted more of the same in the first quarter of this year.

The loss was wider than analysts expected. The number of U.S. airline passengers had been building slowly since May but was hammered again when COVID-19 cases began surging in the fall, causing health experts to beg people to stay home.

United lost $7.1 billion in 2020, an amount exceeded only in 2005, when bankruptcy-related costs pushed the company to a $21 billion loss. Including debt and severance payments, the airline burned through $33 million in cash per day.

Revenue plunged 69% in the fourth quarter compared with a year earlier. United predicted a similar decrease between 65% and 70% in the first quarter of 2021, a slightly more pessimistic view than the one expressed by Delta Air Lines last week.

Analysts believe that Americans who have been cooped up since March are eager to travel again once it is safer. But the slow pace of vaccinating Americans against COVID-19 and concern about new variants of the virus are hurting airline bookings.

Chicago-based United tried to reassure investors that it is laying the groundwork for a gradual recovery once the coronavirus outbreak is contained.

The combination will result in higher profit margins in 2023 than United saw in 2019, before the pandemic, the company predicted.

Read Also: Can You File Bankruptcy And Keep Car

Trans States Airlines : March 2020

Trans States Airlines is a Missouri-based regional airline that flies routes for United under the United Express brand.

The airline had already been planning to shut down by the end of 2020, consolidating its operations with ExpressJet Airlines, another of United’s regional carrier.

However, due to the “unforeseen impact of the coronavirus,” the airline will cease all operations on April 1, Trans States Holding CEO said in a memo to employees.

Trans States operated a flight of Embraer ERJ-145 regional jets.

New United Airlines Ceo Says No To Bankruptcy And Mandating Blocked Middle Seats

At two previous companies, new United Airlines CEO Scott Kirby developed a reputation for bluntness, often favoring honest answers over diplomatic ones. On Thursday, speaking at his first public forum since taking over last week from Oscar Munoz, Kirby showed he wouldnt drop the act just because he now leads a Fortune 100 company.

In a 50-minute discussion at the Bernstein 36th Annual Strategic Decisions Conference, Kirby shared his opinions on several issues hes confronting, including onboard safety, a lack of demand, and mounting debt.

Here are some of the highlights.

Don’t Miss: What Are 4 Advantages Of Filing Bankruptcy

Court Approves Termination Of United Airlines Pension Plans

In a devastating blow to 122,000 workers and retirees, a federal bankruptcy judge ruled May 11 that United Airlines may default on its pension obligations and turn over control of its pension funds to a federal agency that is already swamped by corporate pension defaults. Judge Eugene Wedoff approved the airline managements request to terminate four pension plansfor pilots, flight attendants, mechanics and other ground service workers. The $9.8 billion pension plan default is the largest in US history.

The Pension Benefit Guaranty Corporation will take over the plans, but federal regulations limit the amount of pension payments it can make to a maximum of about $45,000 a year. The highest paid UAL workers, such as pilots, will face pension cuts of up to 50 percent, while lower-paid workers could lose as much as 20 percent. The pilots face a Catch 22: under one federal law, they are not allowed to work after age 60; under another, the proportion of their pension guaranteed by the PBGC is sharply reduced if they retire early, i.e., before age 65.

The industry has been in perpetual crisis since it was deregulated in the late 1970s. Bankruptcies, bitter strikes, union-busting and the liquidation of airlines like Pan Am, Eastern Airlines and TWA followed over the next 15 years. Since the 2001 terrorist attacks, the industry has been in free fall, now exacerbated by the skyrocketing price of oil, which has driven up fuel costs by 35 percent in the past year.

Philippine Airlines Files For Bankruptcy

Virgin Atlantic files for bankruptcy

MANILA, Philippines Philippine Airlines, Asia’s oldest carrier,;has filed for Chapter 11 bankruptcy in the United States to pursue a lender-backed restructuring plan that aims to help the loss-making company get back on its feet following a pandemic-induced crash.

The flag carrier’s proposed restructuring, which is subject to approval by a court in the southern district of New York, includes an agreement with majority of aircraft lessors and lenders to reduce debt payments by over $2 billion and slash;its fleet size by 25%, the company said in a statement on Saturday.

The Chapter 11 filing, which allows a company to continue operations while it restructures its finances, was a product of discussions with key shareholders, PAL said, adding the plan will not affect passengers and employees. The company will also complete a parallel filing for recognition in the Philippines under the Financial Insolvency and Rehabilitation Act of 2010.;;;

We welcome this major breakthrough, an overall agreement that enables PAL to remain the flag carrier of the Philippines and the premier global airline of the country, billionaire Lucio Tan, company president and CEO, said.

Once the bankruptcy protection is over, PAL will borrow $150 million from foreign investors to facilitate post-restructuring activities.

Read Also: Did The Nra Filed For Bankruptcy

American Airlines Files For Bankruptcy

By Kyle Peterson, Matt Daily

7 Min Read

– American Airlines filed for bankruptcy protection on Tuesday to cut labor costs in the face of high fuel prices and dampened travel demand, capping a prolonged descent for what was once the largest U.S. carrier.

AMR Corp, the parent of American Airlines, also filed for bankruptcy and replaced its chief executive.

The company, which employs about 88,000, has been mired for years in fruitless union negotiations, complaining that it shoulders higher labor costs than rival domestic and foreign carriers that have already restructured in bankruptcy.

United Continental Holdings Incs United Airlines and Delta Air Lines Inc, both of which used Chapter 11 to cut costs and later found merger partners, are now the largest U.S. carriers. American ranks third.

The world changed around us, incoming Chief Executive Tom Horton told reporters on a conference call. It became increasingly clear that the cost gap between us and our competitors was untenable.

AMR named Horton as chairman and chief executive, replacing Gerard Arpey, who retired.

American plans to operate normally while in bankruptcy, but the Chapter 11 filing could punch a hole in the pensions of roughly 130,000 workers and retirees.

AMR pension plans are $10 billion short of what the carrier owes, and any default could be the largest in U.S. history, government pension insurers estimated.

Compass Airlines : March 2020

Compass Airlines also owned by Trans States Holdings will also shut down in April.

Compass is another regional carrier, which operates flights for American Airlines under its American Eagle brand. With American cutting domestic capacity by up to 80% by May, it’s had less of a need for contract airlines.

Recommended Reading: How Long Does Chapter 7 Bankruptcy Affect Your Credit Score

Philippine Airlines Files For Bankruptcy Protection As Covid Continues To Drain Financials

Metro Manila Philippine Airlines is seeking bankruptcy protection in the United Statesa move the flag carrier is banking on to survive the coronavirus pandemic as it encounters a turbulence in its finances.

After months of keeping mum on the matter, the company in a statement on Saturday said key stakeholders have agreed to pursue the filing for the US Chapter 11 bankruptcy in New York, which allows the airline to continue its operations while under restructuring.

A parallel filing for recognitions in the Philippines under the Financial Rehabilitation and Insolvency Act of 2010 will also be made.

PAL said the restructuring plan, which needs court approval, includes hopes to slash $2 billion in borrowings and cut its operating fleet capacity by 25%.

The group is also aiming to raise fresh funds amounting to $505 million in long-term equity and debt financing from its majority shareholders, and $150 million from new investors.

“We welcome this major breakthrough, an overall agreement that enables PAL to remain the flag carrier of the Philippines and the premier global airline of the country, one that is better equipped to execute strategic initiatives and sustain the Philippines vital global air links to the world,” Lucio C. Tan, PAL chairman and chief executive officer, was reported as saying in the statement.

The airline said it would be business as usual, mounting flights in the normal course in accordance with safety regulations.

United Airlines Files For Bankruptcy Protection

rememberthatdesigner: Why Did Detroit File For Bankruptcy

The UAL Corporation, Uniteds parent company, listed $22.8 billion in assets and $21.2 billion in liabilities when it filed in Federal Bankruptcy Court in Chicago, making it the largest bankruptcy in aviation history and one of the ten largest American corporate bankruptcies as measured by company assets.

Last week the U.S. government rejected the airlines bid for federal loan guarantees, paving the way for Mondays bankruptcy filing.

United filed after it secured $1.5 billion in loans from several banks to keep its flights operating. The banks that provided this financing will be the first creditors the airline is scheduled to repay.

The court filing has been widely expected and analysts generally predict a successful, albeit lengthy, court process.

The odds clearly favor a reorganization, but that is by no means a foregone conclusion, Gary Chase, an airline analyst at Lehman Brothers, told Reuters. United and its employees and suppliers have to quickly address the companys heavy cash burn in order to ensure a successful reorganization.

The carrier is 55 percent owned by its employees under a 1994 plan that is partially blamed for the high labor costs that contributed to the companys struggles.

The suburban Chicago-based company cut service and laid off nearly 20,000 workers after the Sept. 11 terrorist attacks, but that hasnt come close to making up for revenue lost from the drop-off in business travel.

Read Also: What To Do After Bankruptcy Discharge

Philippine Airlines Files For Bankruptcy To Restructure Pandemic

2021-09-04 15:07:19Editor: huaxia

MANILA, Sept. 4 — The Philippine Airlines has filed for Chapter 11 bankruptcy in the United States to pursue a restructuring plan to keep the company afloat amid the COVID-19 pandemic, the airline said on Saturday.

The airline said the move is “to allow the company to successfully restructure and reorganize its finances to navigate the COVID-19 crisis and emerge as a leaner and better-capitalized airline.”

Chapter 11 is a form of bankruptcy that involves reorganization. A Chapter 11 bankruptcy allows a company to stay in business and restructure its obligations.

“The restructuring plan, which is subject to court approval, provides over 2.0 billion U.S. dollars in permanent balance sheet reductions from existing creditors and allows the airline to consensually contract fleet capacity by 25 percent and includes 505 million U.S. dollars in long-term equity and debt financing from PAL’s majority shareholder and 150 million U.S. dollars of additional debt financing from new investors,” the airline said.

The airline said it has entered into a series of agreements with its lenders, lessors, aircraft and engine suppliers, and its majority shareholder.

The restructuring plan “empowers PAL to overcome the unprecedented impact of the global pandemic that has significantly disrupted businesses in all sectors, especially aviation, and emerge stronger for the long-term,” PAL Chairman and CEO Lucio Tan said. Enditem

Philippines,PAL,Bankruptcy

Virgin Atlantic And Virgin Australia

Airlines were one of the first industries to feel the pain of the pandemic. Virgin Atlantic joined the fray;in August 2020, filing for Chapter 15 bankruptcy as it worked to firm up a bailout aided by the British government. Its sister airline, Virgin Australia, had already filed for bankruptcy in April after the Australian government decided against a massive bailout. Delta owns 49% of Virgin Atlantic.

Read Also: How Many Times Can You File Bankruptcy In Florida

Smart Travel Tips: What Can You Do

One avenue to explore: Go to your credit card company and request a refund or charge back. And be aware that timing is critical. According to the Fair Credit Billing Act, consumers only have 90 days after they make a purchase to file a claim.

Travel Insurance Protection: If an airline liquidates, travel insurance might help. But be sure to check the fine print, as its not a guarantee.

Miles: If your airline is in trouble, you might want to quickly book a flight with your miles and use it; at the very least, the ticket will have cash value versus the miles, which will have no value. Or use your miles in other ways, like to go shopping. If your airline is teetering on the verge of bankruptcy or has gone under, keep records of your miles. You can see if another airline will do a status match to attract your business and your loyalty.

Think Ahead: Heres a hack to consider if have have a voucher and are worried about your airlines well-being: Book a trip using the voucher and take out a travel insurance policy that covers bankruptcy. You might have a better chance of getting a refund.

READ MORE:

RELATED ARTICLES

Popular Articles