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United Airlines creditors OK reorganization

Bankrupt United Airlines said Friday that all classes of its creditors have voted to accept its reorganization plan.
/ Source: Reuters

Bankrupt United Airlines said Friday that all classes of its creditors have voted to accept its reorganization plan.

The No. 2 U.S. airline, a unit of UAL Corp., has been in bankruptcy since December 2002 and aims to exit court protection in February.

The company said the court has scheduled a Jan. 18 hearing to confirm the reorganization plan.

A federal bankruptcy judge this month gave United until March 3 to get its reorganization plan approved without interference by outside parties who would present a competing plan.

United filed its reorganization plan with the court in September and aims to exit bankruptcy in February. The carrier received more than 50 objections to its plan.

A key objection came from creditors and unions that disapprove of an incentive plan that would grant the airline's management 18.75 million shares, or 15 percent, of the restructured United.

Unions representing United's flight attendants and ground workers complained that the plan is unfair to workers, who made steep wage and benefit concessions to keep the struggling carrier afloat.

The airline has argued, however, that the incentive plan is in line with usual business practices that put a certain amount of managers' compensation at risk in the stock market.

A confirmation hearing is set to begin on Jan. 18.

Brace said this month that he expected all objections to the carrier's reorganization plan to be settled consensually.

Rising fuel costs and competition from low-cost rivals has battered United and other major U.S. airlines.