United Airlines signed off yesterday on a $3 billion all-debt financing package that leaves it in position to exit Chapter 11 in February...

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CHICAGO — United Airlines signed off yesterday on a $3 billion all-debt financing package that leaves it in position to exit Chapter 11 in February as targeted after more than three years in bankruptcy.

CEO Glenn Tilton touted the final commitment for financing, led by JPMorgan Chase and Citigroup, as “a signal event in United’s restructuring” and a vote of confidence in the nation’s second-largest airline.

United said the financing package is expected to cover a period of six years, with the marketplace to set the final terms.

The financing commitments, first disclosed in August, would enable United to pay off a $1.3 billion interim financing loan and provide post-bankruptcy operating cash. The carrier called the terms “very competitive.”

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“United’s restructuring positions the company to compete successfully with the strongest airlines and to confront ongoing industry volatility,” Tilton said. “With the past three years as a proving ground and with these global institutions as our partners, we now look forward to moving beyond our restructuring and focusing all of United’s energy and resources on our customers, our investors and our employees.”

James Lee, vice chairman of JPMorgan Chase, said his institution is backing United because of its highly attractive assets and successful management team. “The company has proven its ability to navigate through difficult and volatile circumstances while continuing to improve its operations and financial performance,” he said.

Chad Leat, head of global credit markets for Citigroup corporate and investment banking, cited the airline’s significant progress and improvement throughout its business.

Bankruptcy-exit financing for airlines typically includes a large amount of equity capital. United’s chief financial officer, Jake Brace, said in a message on the company’s recorded hot line that all-debt financing is a better deal for creditors and employees.

“Today represents a validation of three years of hard work that at the outset many critics said could not be done,” Brace said.

United said it will submit the commitment letter for approval of U.S. Bankruptcy Court, which could come at its bankruptcy hearing on Oct. 21. Details of the financing will be filed with the court later.

Bankruptcy expert Bill Brandt said the package appears similar to the debtor-in-possession financing that has helped fund United in bankruptcy, but with additional cash. He expects United’s plan to come in for dispute by creditors and bondholders jockeying for better payouts.

“Now that the financing is lined up, I think there will be other parties that come to the fore,” said Brandt, president and CEO of Development Specialists, a Chicago-based restructuring and management consulting firm.

United’s plan to emerge from Chapter 11 in February remains optimistic, said Brandt, citing high fuel prices among other factors.