CHICAGO (AP)--UAL Corp.'s (UALAQ) chief financial officer told analysts Tuesday that securing a $1.6 billion federal loan guarantee remains the company's largest obstacle to emerging from Chapter 11 bankruptcy by midyear as planned.
But even if the request by the parent of United Airlines for government backing fails, Jake Brace said: "We're going to get out of bankruptcy, one way or the other."
Brace declined to discuss UAL's fallback plans if the Air Transportation Stabilization Board rejects its request, as it did in December 2002 when the Elk Grove Village, Ill.-based airline was trying to avoid bankruptcy.

The New York banks that have committed to $2 billion in exit financing to help UAL leave bankruptcy, J.P. Morgan Chase & Co. (JPM) and Citigroup Inc. (C), have made it contingent upon the government guaranteeing $1.6 billion of it.

Brace told the J.P. Morgan airline conference that UAL is in close consultation with the federal board as it reviews its application - the last one pending before the three-person panel, which was created to help airlines endure the dire consequences the industry faced as a result of the 2001 terrorist attacks. "We are working very hard with them right now," he said.

Ray Neidl, a New York-based airline analyst for Blaylock & Partners, said United Airlines has done a good job reducing costs and still would have options to get out of bankruptcy if the federal loan guarantee application falls through.  "They'd have to find an equity investor, though, which could mean even further changes," he said.

The application is opposed by a trade group representing low-fare airlines that complained this week that the aid would give United an unfair advantage over its discount competitors - rivals United is battling more aggressively with the recent startup of its own low-cost carrier, Ted.

Brace said the airline is pleased that it is considered a threat by the Air Carrier Association of America, whose members include AirTran Airways (AAI), America West Airlines (AWA), Frontier Airlines (FRNT), JetBlue Airways (JBLU) and Spirit Airlines.

On other matters, he said United:
-Has no "current intention" to terminate its pension plan amid the ongoing effort to reduce medical benefits for its retired employees.
-Still expects its stock to be canceled as part of the bankruptcy restructuring. UAL shares, still actively traded by speculators, have gyrated from a low of 43 cents last August to a 52-week high of $3.70 Monday on the OTC Bulletin Board. They fell 61 cents, or 17%, to $2.93 Tuesday afternoon.
-Has "vastly simplified" its fleet as part of bankruptcy cost-cutting and is in the process of reducing its fleet from 570 aircraft when it entered bankruptcy to a projected 470 when it leaves.

United last week reported a net loss of $252 million for January but still met the monthly requirements of the banks financing its restructuring.