2004-7-8
This is Bob Doughty with the VOA Special English Economics
Report.
Bankruptcy is a process that, in some cases, can save a business.
Companies that cannot pay their debts may go to bankruptcy court and
seek protection from their creditors.
In December of two-thousand-two, United Airlines declared
bankruptcy. Since then, the carrier has continued to fly. And it has
reorganized. The aim is to come out of bankruptcy and be able to
meet financial responsibilities. United is the second-largest
airline company in the world.
But last week the government rejected a request for help. The
parent company of United had asked the government to guarantee more
than a thousand million dollars in loans. That meant the government
would share responsibility if United could not repay the loans.
A special committee decided against the aid. The Air
Transportation Stabilization Board has three members. They represent
the central bank, the Treasury and the Transportation Department.
Congress formed this board after the terrorist attacks of September
eleventh, two-thousand-one. Air travel decreased after the attacks
with hijacked planes.
Congress approved loan guarantees of up to ten-thousand-million
dollars to help the transportation industry recover. But the board
has used only about fifteen percent of that. And the time limit to
request aid has passed.In all, United made three requests for loan
guarantees. The first was for one-point-eight thousand million
dollars in June of two-thousand-two. The board denied the request in
December of that year. It rejected the business plan that United had
proposed. But it gave United a second chance.
Then, in June, the board rejected a smaller request. It said
credit markets have improved and guarantees were no longer
necessary. Air travel has increased worldwide over the past
year.Then, at the end of June, the board rejected a third and final
request from United.
United says it has cut about thirty-seven percent of its jobs. It
says it has cut costs by nearly five-thousand-million dollars. The
airline is expected to ask for more pay cuts from its employees. And
it is expected to seek at least two-thousand-million dollars in new
financing without government guarantees.
This VOA Special English Economics Report was written by Mario
Ritter. This is Bob Doughty.