United gets financing to exit bankruptcy

CHICAGO -- United Airlines signed off yesterday on a $3 billion all-debt financing package that leaves it in position to exit Chapter 11 in February after more than three years in bankruptcy.

Chief executive Glenn Tilton touted the final commitment for financing, led by JPMorgan Chase & Co. and Citigroup Inc., as ''a signal event in United's restructuring" and a vote of confidence in the nation's second-largest airline.

United, the primary subsidiary of holding company UAL Corp., said the financing package is expected to cover a period of six years, with the marketplace to set the final terms.

The financing commitments, first disclosed in August, would enable UAL to pay off a $1.3 billion interim financing loan and provide post-bankruptcy operating cash. The Elk Grove Village, Ill.-based company called the terms ''very competitive."

General Electric Co. and Deutsche Bank AG also made proposals, but UAL selected JPMorgan and Citigroup to arrange the total financing, bringing together a consortium of banks that could include those institutions.

James Lee, vice chairman of JPMorgan Chase, said his institution is backing United because of its highly attractive assets and successful management team. ''The company has proven its ability to navigate through difficult and volatile circumstances while continuing to improve its operations and financial performance," he said.

Bankruptcy exit financing for airlines typically includes a large amount of equity capital. United's chief financial officer, Jake Brace, said in a recorded message that all-debt financing is a better deal for creditors and employees.

United said it will submit the commitment letter for approval of US Bankruptcy Court.