Undoing Chapter 11: Learning From the United Airlines Deal

When the Air Transportation Stabilization Board (ATSB) rejected United Airlines Inc's request for $1.8 billion in loan guarantees in 2002, the company sought protection from debtors by filing for Chapter 11. In doing so, it became the 11th US airline bankruptcy since the industry was deregulated in 1978. On Feb 1, 2006, after more than three years in Chapter 11, a deal was sealed, and United emerged from Chapter 11. Its restructuring was comprehensive, but focused on fixing cost and operational rigidities. Even just a few months since its emergence, United's case offers the following lessons about restructuring: 1. Articulate your semi-immutable restructuring vision, and develop flexible strategies and tactics around that vision. 2. Embrace the chaos, and you will discover it is not so chaotic. 3. Understand that the restructuring process is a long road, and you are in it for the long haul. 4. Restructure in an honest, respectful and principled manner, and with humility.