Expectations of impending bankruptcy at United Airlines rose sharply after a government board rejected its bid for a $1.8 billion federal loan guarantee. The Air Transportation Stabilization Board ruled Wednesday that the company's proposed restructuring plan was "not financially sound." While expressing disappointment at the decision, Glenn Tilton, the chairman of United's parent company, UAL Corp., said the carrier "will continue to fly" no matter what its next course. Meanwhile, the carrier's unionized mechanics canceled their scheduled vote on whether to accept pay cuts, a key part of the loan-application strategy. Analysts said a United bankruptcy could help the beleaguered industry by setting an example for lower labor and vendor contracts.
AmeriKing Inc., the second-largest operator of Burger King franchises in the US, filed for protection from creditors under Chapter 11 of the federal bankruptcy code. AmeriKing, based in Westchester, Ill., said it is negotiating with creditors on a restructuring plan, part of which proposes a swap of debt for equity in the company. It has closed 23 outlets, leaving 329 others across the Midwest and Mid-Atlantic states.
A new plan to whittle down its massive $70 billion debt was to be announced by France Telecom, the second-largest phone company in Europe, as the Monitor went to press. Reports said its key features will be an infusion of $9 billion in cash by the French government, which owns 55 percent of the company; a sale of shares aimed at raising $15 billion more; and the streamlining operations, including cuts in capital investment and perhaps layoffs. France Telecom has 145,000 employees, two-thirds of them civil servants.
R.J. Reynolds, the US's No. 2 maker of cigarettes, said it will cut 635 jobs and put two divisions on the market to reduce costs after disappointing 2002 earnings.
Online travel agency Expedia Inc. said it will charge users a $5 fee for most plane-ticket sales, to make up for lower commissions paid by airlines. Orbitz, a rival in the $12.8 billion-a-year industry, already assesses a $5 fee. Travel-ocity, another competitor, is considering the same policy.