page_title: History of United Airlines
section_title: Bankruptcy and reorganization
hierarchical_section_title: History of United Airlines / History / Bankruptcy and reorganization
caption_attribution_description: Deutsch: Boeing 747-400 der United Airlines English: Boeing 747-400 of United Airlines
context_page_description: United Airlines is the third largest airline in the world, with 86,852 employees and 721 aircraft. It was the brainchild of William Boeing and emerged from his consolidation of numerous carriers and equipment manufacturers from 1928 to 1930.
context_section_description: With a strong presence on the West Coast, United benefited from the dot-com boom which boosted traffic (especially premium traffic) to the San Francisco hub. This increase was only temporary and when the bubble finally burst, United was in a worse position than before because it had failed to keep costs under control, possibly due to giving its pilots pay raises of up to 28% in the summer of 2000. Coupled with a battered network, the post-9/11 decline in air travel and skyrocketing oil prices, the company lost $2.14 billion in 2001 on revenues of $16.14 billion. In the same year United applied for a $1.5 billion loan guarantee from
  the federal Air Transportation Stabilization Board established in the wake of the September 11 attacks. When the IAM union failed to approve the loan guarantee—while all other unions approved it—the application was rejected in late 2002 and the company was forced to seek debtor-in-possession financing from commercial sources to cover the expected future losses. United made several attempts to obtain government loans, even enlisting several congressmen and senators for help. The government rejected the application claiming United "could probably obtain the $2 billion in financing it needs to emerge from protection without a federal loan guarantee".
  Unable to secure additional capital, UAL Corporation filed for chapter 11 bankruptcy protection in December 2002. The ESOP was terminated, although by then its shares had become virtually worthless. Blame for the bankruptcy has fallen on 9/11, which triggered the financial crisis in all the major North American airlines, coupled with the economic slowdown that was underway.
  United continued operations during its bankruptcy but was forced to cut its costs drastically. Tens of thousands of workers were furloughed and all city ticket offices in the US closed. The airline canceled several existing and planned routes, and eliminated its entire Latin American gateway and flight crew base at Miami International Airport after March 1, 2004. Furthermore, they reduced their mainline fleet from 557 (before 9/11) to 460 aircraft.
  At the same time, the airline continued to invest in new projects. On November 12, 2003, it launched a new low-cost carrier, Ted, to compete with other low-cost airlines. In 2004 it launched its luxury "p.s." (for "premium service") service on re-configured Boeing 757-200s from JFK Airport in New York City to Los Angeles and San Francisco. That same year, the airline introduced its "Blue Tulip" livery to its fleet to signify the company's fresh start and emergence from bankruptcy, however, despite the livery being new, it was never applied to any new fresh-from-the-factory aircraft, as during its use, United did not order or take delivery for any new aircraft.  The service was targeted to business customers and high-end leisure customers in the coast-to-coast market. In February 2004, the airline introduced the new Blue and White livery, commonly called the 'Rising Blue' livery, with the Blue Tulip on the tail to coincide with a new advertising campaign.
  Financial pressure on the airline was heavy. The SARS epidemic in 2003 depressed traffic on United's extensive Pacific network. The spikes in the price of jet fuel ate away the remaining profits United made. United implemented several fare hikes on overseas routes, citing rising fuel costs, in 2004 and 2005. Two days after its triumphant first flight to Vietnam, United announced that it would cut U.S. flight capacity by 14% after the holidays and add more international flights, which were more profitable.
  United took advantage of its Chapter 11 status to negotiate hard-to-cut costs with employees, suppliers, and contractors, including cancellation of feeder contracts with United Express carriers Atlantic Coast Airlines (which became Independence Air) and Air Wisconsin (which became a US Airways Express carrier).
  Most controversial of all, however, was the 2005 cancellation of its pension plan, the largest such default in U.S. corporate history. It renegotiated its contracts with the pil
caption: A United Boeing 747-400 at Frankfurt Airport
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