For Immediate Release Contact Chris Martin 6306702745 Kirkland And

for immediate release contact: chris martin 630.670.2745 kirkland and ellis leads united through largest chapter 11 filing in u.

For Immediate Release Contact: Chris Martin
630.670.2745
Kirkland and Ellis Leads United Through Largest Chapter 11 Filing in
U.S. History
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Firm Receives Award from Turnaround Management Association—
Chicago/Midwest Chapter
Chicago—January 12, 2006—Of all the businesses adversely affected
after the 9/11 terrorist attacks, perhaps none was as hard hit as
United Airlines.
In addition to dealing with the fall out from 9/11, the Elk Grove
Village, Ill.-based airline also dealt with rising fuel prices, the
potential SARS pandemic (Severe Acute Respiratory Syndrome) and
concern about the war in Iraq. Due to these and other factors,
United’s passenger revenues plunged from $16.9 billion in 2000 to 11.9
billion in 2002 and it was spending an average of $10 million in cash
per day more than it was taking in.
Despite cost cutting moves, debt restructuring and appeals to the
federal government for loans, United could not pull out of this
tailspin, and in December 2002, the nation’s second largest commercial
airline filed petitions for Chapter 11 bankruptcy.
At this same time, United hired Chicago’s Kirkland and Ellis as its
lead restructuring and turnaround counsel.
Kirkland and Ellis embarked on what was to become the largest Chapter
11 filing in U.S. history. In a three-year period, Kirkland and Ellis
was successful on several fronts that paved the way for United to
emerge from Chapter 11:
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Reduced United labor costs by negotiating new collective
bargaining agreements with all of United labor unions. This
included agreements to eliminate the requirement to maintain a
defined benefit plan and pension plans as well as a modified
medical plan.
*
Filed a complaint prohibiting trading by large United stock
holders. This allowed United to claim more of its $4 billion in
net operating losses that accumulated prior to emergence from
bankruptcy.
*
Restructured debt and lease financings held by United’s aircraft
lessors and lenders.
*
Won three of four favorable rulings in bankruptcy court to avoid
paying municipal bond obligations that funded several airport
facilities leased by United.
“While we used every means available to us in the bankruptcy process,
the outcome of this filing was by no means foreordained,” said David
Seligman, one of the leaders of the Kirkland and Ellis turnaround
team. He said his team not only had to deal with the complex nuances
of a large bankruptcy filing but also with factors that were
complicating United’s ability to attract commercial airline passengers
such as the rising cost of fuel, the emergence of low cost airlines
and the drag on airline travel brought on by unexpected events such as
the world’s concern about a potential SARS pandemic.
After all its work, Kirkland and Ellis was able to save United
approximately $7 billion in annual cash savings.
“More importantly, United was able to devise a new business plan and
propose a Chapter 11 plan in late 2005 and secure a $3 billion exit
financing package,” Seligman said.
While United’s story is not over and it faces continued challenges,
both financially and competitively, its new common stock is now
trading at an amount greater than United anticipated, thousands of
jobs have been saved and United can re establish itself as a leader in
the global airline industry, Seligman said.
For its work on the United Airlines turnaround, Kirkland and Ellis
will receive an award for Best Turnaround in the Large Company
category from the Turnaround Management Association Chicago/Midwest
Chapter at its Annual Awards Program on January 12 in Chicago.
The Turnaround Management Association (www.turnaround.org) is the only
international non-profit association dedicated to corporate renewal
and turnaround management. The Chicago/Midwest Chapter of TMA has over
1,000 members and is comprised of turnaround practitioners, attorneys,
accountants, consultants, investors, lenders, venture capitalists,
appraisers and liquidators. For more information, visit the Chapter’ s
web site at www.chicago.turnaround.org or call 815-469-2935.