The United Airlines saga continues as the carrier, once the world's largest and now rapidly becoming an also-ran, has entered its second year of eluding a seemingly inevitable reorganisation.

Just days after its Air Line Pilots Association finally agreed to a new, $2.2 billion, five-and-a-half-year cost-cutting plan, United was told by the Air Transportation Stabilization Board to supply more supporting details for its application for a federal guarantee of a $1.8 billion loan package.

This was the second time the board had delayed action on United's request, which the airline says it must have to avoid bankruptcy reorganisation. The board's request covers fundamental areas of United's plan, including revenue enhancements as well as cost cuts.

Within days of the board's deferral, United had some good news when German bank Kreditanstalt fur Wiederaufbau extended for five years a pending $500 million debt and then Lufthansa chief executive Jurgen Weber said the carrier might offer to assist its Star ally.

Although Lufthansa had earlier ruled out aid, Weber said the support could be fiscal or, more likely, further commercial co-operation on routes. Soon after this positive news, United's International Association of Machinists union walked out of its separate concessions talks.

UBS Warburg analyst Sam Buttrick says the slow pace of labour talks and the board's delay makes bankruptcy likely this winter. But United chief executive Glenn Tilton says it can still be avoided. He says United may revive its low-cost Shuttle by United subsidiary in the western states, shut after the 2001 attacks.

Source: Airline Business