THE UNITED AIRLINES BANKRUPTCY process had critics beyond those in organized labor, who argued that it was unnecessarily drawn out and wasteful.
“The United bankruptcy was excessively long, frightfully expensive, and none of the added time or expense helped creditors or long-term competitiveness,” Hubert Horan, a Phoenix-based airline consultant who worked with some creditors in the United case, told SN. “Every one of [Jake] Brace's plans simply made marginal cuts without substantively addressing United's structural capacity, cost and competitive problems. It took years to come up with a plan that could plausibly serve as the basis for reorganization.”
Horan noted that United eschewed a takeover offer from Continental Airlines that might have solved many of its structural issues while it was still in Chapter 11. “Instead, United spent nearly $1 billion on lawyers, consultants and other bankruptcy case professionals during this period fighting to protect [CEO Glenn] Tilton and Brace's personal control over the reorganization process and the surviving company,” he said.
When United emerged from Chapter 11 in 2005 — after more than three years under federal protection — it was behind a reorganization plan that estimated oil prices would decline, and didn't account for an economic downturn. As a result, the airline's performance again lagged the industry, sources said. However, some observers now say that United's future prospects look bright after Tilton finally engineered a merger — with Continental — last year.