>>Practical effect for the customers over the short term is very little other than the schedule changes and service changes to economize a little. Look what happened after the USAIR chapter 11. <<
Here's what's happening now at US Airways, the DIP lender is threatening to pull the plug and turn out the lights. A similar game of hardball will probably occur in the coming weeks at UAL:
_______________________________________
December 7, 2002
US Air's Chief Lender Threatens the Ultimate
By MICHELINE MAYNARD
The New York Times
The chief executive of the primary lender to US Airways said yesterday that he would liquidate the airline if unions refused to provide $200 million in additional wage and benefit concessions.
In an interview, David G. Bronner, head of the Retirement Systems of Alabama, said that he did not expect to have to follow through on his ultimatum and predicted that the discussions between the airline and its employees would result in an agreement by next week.
The concessions would be the second round in US Airways' efforts to draft a reorganization plan under Chapter 11 protection from its creditors. US Airways has said it hopes to submit its proposal to a federal bankruptcy court by Dec. 20. Before that, it would like to receive final approval for $900 million in loan guarantees from the government, which gave it provisional approval last summer.
To do so, the airline has asked union members for further cuts in pay and benefits. If they do not comply, Mr. Bronner said in the interview, the airline would go out of business and be liquidated in bankruptcy court. "What's their alternative?" he asked rhetorically. "If they don't want to do this, we'll Chapter 7 it."
Referring to the debtor-in-possession financing that the Alabama pension system is providing the airline during its time under bankruptcy protection, Mr. Bronner said that without concessions, "we'll pull the D.I.P. financing and they're gone."...
http://www.nytimes.com/2002/12/07/bu...t&position=top