"United Gets Grace Period on Airport Bond Debt"

Monday, March 31, 2003

United Gets Grace Period on Bond Debt 
By ERIK AHLBERG
Dow Jones News


CHICAGO - Four airports on Monday agreed to give United Airlines a 15-day
grace period before proceeding with eviction actions should the airline fail
to make debt payments on about $1.7 billion in bonds. 

UAL, parent of United Airlines, believes it doesn't have to make payments on
the special-facilities revenue bonds, originally intended for
airport-improvement projects, due to restrictions put in place after the
airline sought federal bankruptcy protection in December. UAL says the
payments represent unsecured debt which wouldn't be paid while it is in
bankruptcy. 

But representatives for the airports in Denver, Los Angeles, New York and
San Francisco contend the payments must be made. 

UAL has about $16 million in payments due on April 1. On March 1, UAL missed
a $3.2 million payment on bonds for improvements at Chicago's O'Hare and a
$1 million payment on Miami-Dade bonds. 

UAL's bonds were generally unchanged Monday. 

According to UAL's annual report, filed with the Securities and Exchange
Commission late Friday, if default provisions are triggered, the company
could lose its status as a "signatory airline" which would result in higher
rents and landing fees. 

UAL earlier this month filed temporary restraining orders to prevent the
airports from starting default actions should the airline decide not to make
payments. But Judge Eugene R. Wedoff of the U.S. Bankruptcy Court for the
Northern District of Illinois refused to grant the company's requests,
saying UAL must wait until there is actually a default before bringing the
matter before the court. 

In addition to the 15-day minimum grace period, the sides on Monday also
agreed to a May 23 hearing date to determine how to proceed with a formal
trial on the matter. 

Shares of UAL closed at 84 cents Monday, down 1 cent, or 1.2 percent, on the
New York Stock Exchange.


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