United Airlines' parent,
, says it's on track to emerge this fall from Chapter 11 bankruptcy protection.
The company announced Friday that it was initiating its exit process by filing a proposed timeline with its bankruptcy court. It also said it plans to file a plan of reorganization with the court around Aug. 1.
In its two-and-a-half years in bankruptcy, United has taken drastic measures to reduce costs in to cope with brutal industry environment. The company has extracted more than $3 billion in annual concessions from workers and gotten government pension insurers to take over its pension plans, a move that will reduce benefits for many employees and retirees. These actions have generated worker resentment and helped prompt lawmaker efforts to reform the nation's pension laws.
"Today's filing represents perhaps the most significant step forward in our restructuring," said Glenn Tilton, the company's president and CEO, in a news release. "We appreciate the substantial contributions of our stakeholders that have brought us to this point, and we look forward to our ongoing collaboration as we complete the work necessary to successfully conclude our restructuring and exit as a viable, competitive company."
On Thursday, another network carrier,
, took an important step in its efforts to emerge from Chapter 11 by filing its plan of reorganization and disclosure statement with the court overseeing its bankruptcy.
The plan is based on US Airways' merger with
America West Holdings
, which the two airlines announced in May. In addition to lifting US Airways out of bankruptcy, the merger would significantly increase America West's scale. But analysts have said it faces significant challenges, including meshing two labor groups with different seniority levels.
US Airways said the bankruptcy court has scheduled an Aug. 9 hearing to sign off on its disclosure statement. It also said it and America West remain on track to close their merger by late September or early October. The deal has already received the approval of federal antitrust enforcers.
In a news release, US Airways said its creditors who have claims of $50,000 or less will receive a cash payment of 10% of the amount of their claim. Other creditors with unsecured claims will receive stock in the reorganized company.
Existing common shares of both United and US Airways are likely to be canceled and rendered worthless when the companies emerge from bankruptcy protection. US Airways shares were trading at 67 cents, and United shares were quoted at $1.45.