UAL rolls out debt plan

By Chris Walsh, Rocky Mountain News (Contact)

Published November 27, 2007 at 8:28 a.m.
Updated November 27, 2007 at 8:58 a.m.

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United Airlines is looking to pay down $350 million in debt and implement up to $500 million in "shareholder initiatives," although the company did not specify what that would include.

The carrier said that the "timing and form of any shareholder initiative" will be determined by its board of directors.

"We've said for the last couple quarters that this was something we were wanting to do, and we're looking to get the flexibility to do it," said United spokeswoman Jean Medina.

The Chicago-based carrier will present the proposal to creditors today, and it expects a decision by next week.

One observer said United could look to buy back stock or boost dividends. The move also might signal that United is paving the way to participate in a merger or acquisition, said Bruce G. Allen, who heads an investment firm in Denver.

"United may be using this as a preparation to set themselves up to look at a merger with Delta" Air Lines or another carrier, Allen said.

A hedge fund that owns Delta shares recently urged the company to merge with United. Both companies have stated a desire to participate in industry consolidation but denied they have talked with each other about a potential hookup.

United, which is the largest airline in Denver, has paid down $2.7 billion in debt since it emerged from Chapter 11 bankruptcy early last year.

The carrier said its proposal to lenders includes provisions that would allow it to make additional loan pre-payments and implement more shareholder initiatives.

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