United Airlines parent UAL today posted its largest annual net loss ever, $3.2 billion for 2002, after filing for bankruptcy protection in December.
The world's second-largest airline, owned by employees, is in the midst of a complicated Chapter 11 reorganization process expected to take at least 18 months.
Some lenders to the airline maintain the restructuring is going well, with United exceeding all of its initial financial performance targets, including things like cash flow, liquidity and operating statistics.
But several other factions were said to be unhappy with the progress, including at least one debtor-in-possession lender and several unions, which have openly criticized as yet unspecific plans to launch a low-fare carrier.
Steering United out of bankruptcy is the foremost challenge for its new chief executive, Mr Glenn Tilton, who landed at United last fall from the oil industry after an intense executive search. He immediately faced a plate full of problems.
"It's still quite a precarious restructuring," said Mr David Skeel, a bankruptcy and corporate law expert at the University of Pennsylvania law school. He likened the situation to one in which both labor and management possess nuclear arms.
"One or two false moves and the whole thing could blow up," Mr Skeel said, as the history of airline bankruptcies is filled with liquidations. Most notably: Pan Am, Eastern and Midway.
UAL's huge annual shortfall was slightly less than the industry record $3.5 billion loss posted by the world's largest airline, American Airlines' parent AMR Corp.
For the fourth quarter of 2002, UAL's net loss was $1.5 billion, or $20.70 per share. Revenue rose to $3.5 billion from $2.9 billion in the year-ago period, but total operating expenses for the quarter rose 16 per cent.
After analyzing the quarter, rating agency Standard & Poor's said it may cut UAL ratings not already in default.