Today we have some important news to share with you about the steps United Airlines is taking to change the way it does business to better compete in the new operating environment.

For more than a year, United has faced a number of challenges as a result of the general economic slowdown and the tragic events of September 11, 2001.  United has been working hard to bring costs in line with reduced revenues.  While the company has made some good progress, we determined that we must pursue a different path to strengthen the company and remain one of the world’s premier airlines. 

As a result, on December 9, 2002, United filed to reorganize under Chapter 11 of the U.S. Bankruptcy Code.  This filing does not mean that United is going out of business.  On the contrary, this is a necessary step to stabilize our finances and create a more efficient and more competitive airline for the future.  This process will not affect our ability to operate.  We will meet customer needs as usual and continue operating in the regions we currently serve. 

In conjunction with our filing, we have arranged $1.5 billion in debtor-in-possession financing from a group of banks led by J.P. Morgan Chase and Citibank.  This financing, combined with approximately $800 million in unrestricted cash-on-hand, will be sufficient for United’s anticipated operating needs during this process.

United will continue to pay for all goods and services provided following the Chapter 11 filing.  We greatly value our business relationship with you and hope we can continue to do business with you for many years to come.  We will have both the means and the permission of the Bankruptcy Court to make timely payments for all goods and services provided to us after the Chapter 11 filing date of December 9, 2002.  Please be aware that post-petition suppliers are given “priority administrative status” under the law, providing additional protection to you, so we encourage you to continue providing goods and services to United on normal terms.

At this time, the company by law cannot pay for goods and services received before the filing.  Payment for these pre-petition invoices will be determined by the Bankruptcy Court at a later time.  You will have the opportunity to file a claim for any pre-petition debt with the Court, and will receive instructions for filing such a claim shortly.  We have been advised that this is a complex and lengthy process.  You will probably be contacted in the next 75 days.

We are committed to remaining a major player in the global airline industry and we expect the reorganization to improve our business with more efficient operations and stronger finances that will make United a better business partner going forward. 

We recognize that these actions will affect you and your business, and we regret that it was necessary for United to take this action.   Your organization has been a part of our past success, and we thank you for your continued support as we work through this process. 

We are committed to keeping you informed of developments at United.  The latest information about our restructuring can be found at www.united.com.  In the meantime, if you have any questions about this matter, please call our Supplier Support Call Center at 877-825-1019 (toll free) or 847-700-1001 or your United purchasing representative.

Sincerely,

Rick Poulton
Senior Vice President - Strategic Sourcing and
Chief Procurement Officer