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  • February 2005 (Revised November 2012)
  • Supplement
  • HBS Case Collection

UAL 2004: Pulling Out of Bankruptcy (CW)

By: Daniel Baird Bergstresser, Kenneth A. Froot and Darren Robert Smart
  • Format:Electronic
  • | Language:English
  • | Pages:1
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Abstract

UAL is a large air transportation company with roots that go back to the 1920s. As a legacy carrier, going back to before the 1978 deregulation of air transportation markets, United Airlines is burdened with cost structures that make it difficult to compete with newer competitors. In addition, UAL has the burden of $7.6 billion in unfunded pension obligations and $2 billion in unfunded retiree health obligations. In June 2004, UAL is still operating under Chapter 11 bankruptcy protection, which began December 2002. It has needed extensions of the exclusivity period from the bankruptcy court. UAL's plan of reorganization is predicated on receiving $1.8 billion in loan guarantees from the Air Transport Stabilization Board (ATSB). But its request for loan guarantees from the ATSB was recently rejected. The company must decide what to do next and how to emerge from bankruptcy.

Keywords

Bankruptcy; Compensation; Costs; Loans; Reorganization; Restructuring; Financing and Loans; Insolvency and Bankruptcy; Compensation and Benefits; Air Transportation Industry; United States

Citation

Bergstresser, Daniel Baird, Kenneth A. Froot, and Darren Robert Smart. "UAL 2004: Pulling Out of Bankruptcy (CW)." Harvard Business School Spreadsheet Supplement 205-709, February 2005. (Revised November 2012.)
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About The Author

Kenneth A. Froot

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More from the Authors
  • What Do Measures of Real-Time Corporate Sales Tell Us About Earnings Surprises and Post-announcement Returns? By: Kenneth A. Froot, Namho Kang, Gideon Ozik and Ronnie Sadka
  • Does Shareholder Proxy Access Improve Firm Value? Evidence from the Business Roundtable Challenge By: Bo Becker, Guhan Subramanian and Daniel B. Bergstresser
  • Glossary of Municipal Finance Terms 
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