I extracted the events from an article found in the Chicago Tribune. You can read the entire article at http://www.chicagotribune.com/business/chi-0212080454dec08,0,2000258.story?coll=chi%2Dnews%2Dhed
Here is a timeline of events leading up to today (Sunday) highlighting United's possible decision to file for bankruptcy.
District Lodge 141, representing United's 24,500 ramp, gate and customer service representatives, and District Lodge 141-M, representing 13,000 mechanics, vote on a proposal to cut wages by 6 percent to 7 percent. The pilots already had accepted pay cuts projected to save the airlines about $2.2 billion.
The machinists union was confident wage concessions were the last piece needed to secure the loan guarantee.
In Chicago, it was a raw, blustery day. On one side of the wall of the union hall in Des Plaines, the airline's ramp and customer service workers were eagerly discussing plans for Thanksgiving and how they would deal with the pay cut. (Union workers this summer had received their first raise since 1994, when they made previous concessions in exchange for a 55 percent stake in the airline and two board seats. The airline's non-union employees, who absorbed similar cuts, also gained a representative on the board.)
On the other side of the wall, where the airline's mechanics were voting, the mood was somber. "It probably will pass but not with my vote," said Richard Sierra.
A few minutes after midnight, Scotty Ford, president of the mechanics group, announced the startling outcome: The union had turned thumbs down in their vote.
Thanksgiving itself was bright and sunny, but not for other United workers who learned to their amazement that the mechanics had rejected the proposal.
Unions representing the airline's two other major employee groups, the Air Line Pilots Association and the Association of Flight Attendants, remained silent as industry experts characterized the vote as the beginning of the end for United's loan-guarantee application. Still, United officials put on a brave face.
By midafternoon, Jake Brace, the airline's executive vice president and chief financial officer, began calling reporters to assure them that the airline already was negotiating with the mechanicsunion.
He failed, however, to check with the mechanics. The mechanics weren't talking with the company, they said, and added that talks weren't even scheduled. Despite the denial, the company insisted that talks were under way.
"It's not a pretty picture, and I don't know what will happen next," said one machinists union official.
United officials began calling representatives of the mechanics union seeking a way to schedule another vote.
Canale, who lost credibility with United's executives after the vote, took the mechanics into the woodshed. In a blistering letter, he accused them of all but destroying the airline's chances for a loan guarantee.
Moods at United suddenly brightened. The airline and the mechanics union were talking about a new proposal, and the flight attendants union announced that its 24,000 members had overwhelmingly approved wage cuts, representing $412 million in cost savings.
Greg Davidowitch, who as president of the flight attendants unit led the effort to get United's unions working together, chided industry naysayers, who had insisted the airline was on a trip to bankruptcy court.
United and its mechanics union spend the day talking at a Rosemont hotel. Unlike the contentious telephone conversations the previous Friday, company and union officials believe they have a plan that could win acceptance with members.
Although it offers no further cuts in wages, the new plan contains Tilton's pledge that the airline would address complaints about the hours they work.
Before Wall Street trading in stocks opens, the mechanics union makes the big announcement: Members will reconsider their rejection of the proposed wage concessions. The union believes that the news will at least lift United's stock. It proves a smart move. Shares of UAL Corp., the parent of United, rise 34 percent to close at $3.28 a share. It was the highest the stock would reach during the week.
Union president Ford also issues a warning to his members. "This is the final opportunity to avoid bankruptcy and protect against the elimination of our collective bargaining agreement."
At United's headquarters, some people seem to be in the dark on how important the next few days will be. Joe Hopkins, a United spokesman, predicts an easy week, saying the only thing on tap at that point is the mechanics' re-vote.
United officials believed they still had time on their side because the loan board has tended to work slowly. A meeting on the loan hadn't been scheduled.
To shore up finances in the event of a bankruptcy filing, however, United decides to delay payment of $375 million due bondholders. That decision also sets in motion a requirement that it pay $500 million in loans owed to the German government's development bank. The airline also discloses that it is in default on another $45 million owed lenders.
Late Monday, an adviser to the federal board offers the first hint that United's loan guarantee package is in trouble. "Do you think I'd be at home if we were going to do something for United this week?"
United doesn't officially learn of its dire situation until the next day.
United catches wind that the board may be meeting. Brace quickly faxes a letter to Daniel Montgomery, the board's executive director, asking that it wait until the mechanics vote is completed.
In addition, the company says it needs more time to wrap up negotiations on $200 million in bonds that would be provided by the Illinois Development Finance Authority. Boeing Capital Corp. and GE Capital Corp. already had turned down a plea to fund the unsecured portion of the $2 billion loan.
The loan board's staff works late into the night considering the new information.
Early in the morning, Tilton, unaware that the board is about to rule on the airline's request, boards a United jet bound for San Francisco to meet with airline mechanics. He wants to make a last-ditch effort to make sure the vote slated for the next day is approved.
Two hours into the flight, Tilton begins making plans to return to Chicago after being told that the federal board is preparing to announce its decision.
Meanwhile, the financial adviser to the board says the new information from Brace won't reverse its decision. United's fate is sealed when Fitch Ratings Service, an international bond-rating company, tells the board that the loan would have "an extremely low credit rating." Fitch, working on behalf of the board, had evaluated United's application for the loan guarantee.
By 11 a.m., word leaks that the board--not just the staff--is meeting.
Board member Kurt Van Tine, general counsel of the Department of Transportation, urges the panel to give United another week in which to gather new data before rendering its decision.
But Van Tine is overruled by the other two board members: Federal Reserve Board governor Edward Gramlich, an expert on the government's bailout of Chrysler, and Peter Fisher, undersecretary of the treasury.
The big hitch in United's plan is a provision that would restore union wages to their current level in 2007. Board members and staff members project that the airline would face another liquidity crisis "within the next few years."
By 12:30 p.m. the decision is final. But United isn't told a thing. Executives were "in the white," said one source."There was absolute silence."
The airline wouldn't learn of the decision until 3:45 p.m. when Montgomery faxes Brace a three-page letter detailing the denial. He also tells Brace in a phone call that the agency will hold a teleconference for the news media announcing the decision.
It will mark the board's first such conference call to explain a decision since it began taking applications from airlines for loan guarantees 12 months earlier. The board was created to administer a $15 billion airline bailout fund created last year by Congress in the wake of the terrorist attacks.
Over the next few hours, turmoil reigns at the airline's Elk Grove Township headquarters as it struggles to decide how it will respond to the decision.
At about 4:30 p.m. the federal board issues a news release and a copy of its letter to Brace in which it denies the loan guarantee.
United's unions react slowly to the news. None had received advance notice from the company that the airline's bid had been turned down.
They finally issue short statements saying that they have agreed with each other to resume negotiations the next day in the hope of developing a new concession package. Their goal is to put together a package that would garner approval of a loan guarantee on a reapplication.
Led by the flight attendants' Davidowitch, the union coalition agrees on what they are willing to cut voluntarily to avoid a bankruptcy. Discussions continue with United officials over possible cuts they can make to obtain the financing.
United learns that the federal board believes the airline was $1 billion per year short in the required cash savings it presented to secure the loan, and that the collateral it offered to secure the loan guarantee was insufficient. Collateral consisted of its landing rights at Heathrow International Airport in England and its Latin American and Pacific routes.
In addition, the airline is told the pay cuts proposed by the unions would have to be permanent during the 5 1/2 years of the loan guarantee.
Tilton, in a shock to the carrier's unions, warns that a bankruptcy filing is likely and that deeper cost savings are necessary.
Dec. 7 (yesterday):
United's board met to consider its options and was expected to reconvene Sunday. Bankruptcy appears to be the only option that is viable.
A rather sad turn of events. We wish United well!
Its better to be on the ground wishing you were in the air than be in the air wishing you were on the ground. Fly safe!