CHICAGO -- United Airlines pledged Monday to cut labor and other costs dramatically in bankruptcy court after two years of steep losses forced it into the largest Chapter 11 filing in aviation history, and sixth-biggest of any U.S. company.

Hoping to prevent passengers from defecting to rival airlines, CEO Glenn Tilton pledged that United will keep flying as usual and said the filing provides an excellent chance to overhaul the world's No. 2 carrier.

But it will be a daunting task in the midst of the industry's worst-ever downturn. United attorney James Sprayregen told a bankruptcy judge the airline faces "profound and agonizing change."

United Airlines is the largest air carrier operating out of Denver International Airport. With its commuter affiliates, the airline serves about 65 percent of passengers at DIA.

About 1,300 United pilots and 1,000 mechanics are based in the Denver area.

UNITED AIRLINES United's Bankruptcy Info Will You Be Flying United This Holiday Season? What Will Happen To United? Colorado Real Estate Fallout History Of United Frequent Flyer? FACTS 64 percent of all DIA passengers fly United. United has 81,000 employees worldwide. About 1,300 United pilots are based in Denver. About 1,000 United mechanics are based here. United is 55 percent employee owned. Operates 1,700 flights a day, or 20 percent of all U.S. flights. Has most extensive worldwide route structure of any airline.

United's pre-dawn filing in U.S. Bankruptcy Court in Chicago portrayed a bleak financial situation including losses that have worsened recently to $20 million to $22 million a day, underscoring the urgency of slashing costs heavily.

"The only conceivable way for the debtors (United and parent UAL Corp.) to reorganize into a profitable and vibrant airline capable of providing stable employment will be to reduce their labor and other costs dramatically," the carrier said in its filing.

While it did not cite specifics of potential cuts to be made in a bankruptcy that Tilton expects to last about 18 months, they are certain to include reducing the number of flights, dropping unprofitable routes and slashing employees' wages.

"We're in control of United's destiny," Tilton said in a telephone interview. "We've made a good decision for United. It is in fact Chapter 1. ... This is a tremendous opportunity for United to transform this company and to emerge stronger than ever."

United operates about 1,700 flights a day, or about 20 percent of all U.S. flights. The dominant carrier at Denver International Airport, United has the most extensive worldwide route structure of any airline, but also the industry's highest costs.

Passengers aren't likely to see any immediate effect on flights or frequent-flier miles, according to both United and industry analysts. But the filing could set in motion a restructuring of the entire industry. Experts say large carriers may be forced to become more like their low-cost rivals, flying fewer and smaller planes and paying out less in wages.

Suburban Chicago-based United has lost $4 billion in the last two years due to a weakened economy, flawed business strategies and the Sept. 11 attacks' fallout, resulting in less air travel. It said in its filing that the impact of low-cost carriers has been "particularly severe," helping send its passenger revenues plunging from $16.9 billion in 2000 to a projected $11.8 billion for 2002.

United listed assets of $22.8 billion and liabilities of $21.2 billion. It said it obtained $1.5 billion in financing from several banks to continue operating in bankruptcy and had $800 million cash on hand _ not enough to pay off $875 million in debt that came due this week.

The bankruptcy filing will come at a steep price for the 83,000 employees who own 55 percent of the company. A bankruptcy court judge is almost certain to order wage and job cuts, and could dissolve the employee stock ownership plan.

The leaders of United's unions said both sides must work together during restructuring.

"Despite the difficulties that brought us to this point, we must now come together and focus our efforts on the survival of United Airlines, and ensuring that this bankruptcy does not lead to liquidation, as United's competitors wish," Machinists' union presidents Randy Canale and Scotty Ford said in a communique to their members.

Despite analysts' expectations that United's stock would become completely worthless, investors appeared to be speculating on it. Shares of UAL, which reached $100 a share in 1997, rose 24 cents to $1.17 Monday afternoon on the New York Stock Exchange, with more than 40 million shares traded.

United, on a pace to lose an industry-record $2.5 billion this year, had pinned its last hopes of avoiding bankruptcy on getting federal backing for $1.8 billion of a $2 billion loan that banks wouldn't otherwise provide. But the Air Transportation Stabilization Board, created last year to help the airline industry recover after Sept. 11, rejected United's request on Wednesday.

The linchpin to United's proposal was $5.2 billion in labor cutbacks by 2008, but the three-member federal panel said the airline's business plan was financially unsound and a loan guarantee would have risked U.S. taxpayers picking up the tab.

United cut service and laid off nearly 20,000 workers after last year's terrorist attacks, but it hasn't come close to making up for revenue lost from the drop-off in business travel.

Along with Tilton's public reassurances Monday, the airline is running full-page ads in newspapers in major U.S. markets on Tuesday to persuade passengers not to give up on United. The ads talk of a new beginning for the airline and start out: "There's one thing we all feel very strongly about at United. Our future."

Statement From Governor Owens

Colorado Gov. Bill Owens said he was confident the airline would emerge from bankruptcy and urged hesitant travelers to continue to use the carrier.

"I believe we as travelers must continue to show our confidence in the airline. I will be flying to Washington D.C. on United this week. I think United can emerge as a better airline and consumer confidence will play a big role during that process," Owens said in a statement released by his office Monday.

Additional Resources:

United Airlines