). Nearly 32 months after Chief Executive Glenn Tilton put the carrier in Chapter 11 bankruptcy, United filed a reorganization plan on Sept. 7 to emerge by Feb. 1.
The plan, which still must be approved by creditors and a bankruptcy judge, relies on $2.5 billion in loans from a group that includes JPMorgan Chase (JPM
) and Citigroup (C
). United might raise $500 million more by offering new shares to creditors. Since filing Chapter 11 in December, 2002, Tilton has slashed United's nonfuel spending by 18%, or $3 billion, by cutting jobs and wages, dumping pensions, and shrinking the domestic schedule. "We are now competitive with the best network carriers," Tilton, 56, told employees.
But with fuel prices at record highs, United is still losing money. So are most of its peers. Indeed, analysts are warning that Delta Air Lines (DAL
) and Northwest Airlines (NWAC
) may end up in bankruptcy before United's exit, as higher fuel costs consume the savings generated by operations cutbacks. The hammer may be about to come down even harder on the individuals involved in accounting giant KPMG's sale of four controversial tax shelters between 1996 and 2002. A government prosecutor says the Justice Dept. expects to charge at least 12 more individuals in the case. The prosecutor would not say who else would be indicted, but they could include KPMG partners, bankers, and lawyers involved in the deals. On Aug. 26, a grand jury indicted eight former KPMG partners as well as an outside lawyer for their role in selling the shelters and for allegedly lying to the Internal Revenue Service about the deals. The lawyers for the defendants denied the charges. KPMG agreed to pay $456 million in penalties, stop selling the shelters, and cooperate with Justice. In return, the feds agreed to delay charges against the firm for a year. The strike by Boeing's (BA
) Machinist Union is about to get costly for the Chicago aerospace giant. If the five-day-old strike continues for a month, it would delay the delivery of about 33 aircraft, or 40% of the anticipated production for the third quarter. According to Wall Street analysts, the delivery delays would cost Boeing about $97 million, or 12 cents a share, in the third quarter. A continued strike could cost Boeing more than $80 million a month. So far, neither the union nor Boeing management are talking. The 18,300 hourly production workers voted overwhelmingly to walk out on Sept. 1 over benefits that union leaders say fell far short of their demands. Biotech up-and-comer Alnylam Pharmaceuticals (ALNY
) got a big vote of confidence from Novartis (NVS
). On Sept. 7, the Swiss pharmaceutical giant announced it will partner with Cambridge (Mass.)-based Alnylam to develop therapies based on RNA interference, a potentially promising approach of silencing disease-causing genes. The deal could funnel more than $700 million in payments to Alnylam, which saw its shares jump 43.8%, to $13.75. Would the last senior staffer to leave the Securities & Exchange Commission please turn off the lights? The decision by SEC chief accountant Donald Nicolaisen to step down in October gives the agency's new chairman, Christopher Cox, another top slot to fill. Already, two of the SEC's four divisions -- investment management and market regulation -- are without a chief, and insiders expect Alan Beller, director of the Corporation Finance Div., to depart soon, too. The openings will let Cox reshape the agency to his liking. In what could be his last official act, Nicolaisen was expected on Sept. 8 to throw cold water on a method for valuing employee stock options proposed by Cisco Systems (CSCO
). >> BearingPoint (BE
) says the SEC has launched a formal probe of its business dealings.
>> Microsoft (MSFT
) filed a new appeal against the EU's March, 2004, ruling that it violated competition law.
>> Ford Motor (F
) is recalling nearly 4 million pickups and SUVs because of a faulty speed-control device. Executive recruiter Korn/Ferry International (KFY
) on Sept. 7 reported a 38% profit gain for its fiscal first quarter but cautioned that its talent searches slowed during the summer. Investors responded by knocking the search firm's shares down 7%, to $18.27.