Watch CBSN Live

Friendly Skies In Peril

United Airlines' parent company says it is preparing to file for bankruptcy this fall unless it succeeds in lowering expenses.

"Unless we lower our costs dramatically, filing for bankruptcy protection will be the only way we can ensure the company's future and the continued operation of our airline," Jack Creighton, United's chairman and CEO, said in a statement.

Three airlines have already filed for bankruptcy protection this year, citing the sluggish economy, competition from low-cost carriers and a downturn in travel following Sept. 11. United, the nation's No. 2 airline, would be the biggest to seek protection from creditors.

UAL Corp. said it was setting a 30-day limit to try to reach agreements on cost-cutting. Its pilots' union agreed to a 10 percent pay reduction earlier this summer, but other employee groups have rejected proposed pay cuts.

United is awaiting a decision on its application for a $1.8 billion government-backed loan that it says is necessary for it to compete in a difficult market. But Creighton told employees this week that the Air Transportation Stabilization Board appears poised to reject the application without more evidence of cost-cutting.

The airline said it is changing its business plan to build a stronger, more cost-competitive airline, but gave no details pending the outcome of talks with stake-holders, including employees who own 55 percent of the company.

"The changes we need to make are urgent, significant and immediate," Creighton said. "Simultaneously, we are preparing for the potential of a Chapter 11 bankruptcy filing this fall, due to our fourth-quarter debt payments."

The payments total $875 million.

View CBS News In