United stock plummets

Airline slides toward bankruptcy

? United Airlines stock tumbled Thursday, losing two-thirds of its value, amid rampant speculation that the world’s second-largest airline was about to declare bankruptcy.

The airline’s outlook appeared bleak after the government on Wednesday rejected a request for a $1.8 billion federal loan guarantee that United said it needed to stave off a Chapter 11 bankruptcy filing.

It would be the biggest bankruptcy in airline industry history.

United’s parent, UAL Corp., opened at $3.12 on the New York Stock Exchange and closed at $1, the lowest level in more than 40 years.

Trading was suspended for most of the morning because of what the NYSE said was “news that’s pending that could materially affect the trading of the stock.” But trading resumed later in the day with no announcement from United on its next move.

Dow Jones & Co. removed UAL from the Dow Jones Transportation Average and replaced it with United Parcel Service Inc.

UAL chief executive Glenn Tilton, asked about the possibility of bankruptcy, told Chicago’s WLS-TV: “What we have said is we’re going to consider all of our options, and nothing really is a foregone conclusion.”

He has said that the airline would continue to fly whatever choice was made. United makes about 1,700 flights per day and has about 83,000 employees worldwide.

United Airlines ticket agent Toni Eisele works on paperwork for a customer at Denver International Airport. Trading in United Airlines stock was temporarily halted after it plunged 59 percent Thursday, a day after the world's second-largest carrier lost its request for government loan backing it said was needed to keep it out of bankruptcy.

In bankruptcy, United’s stock probably would become virtually worthless and the airline, which is 55 percent owned by its employees, would lose control of its restructuring to a judge.

The carrier is continuing negotiations today to secure a $1.5 billion loan in the event that it files for bankruptcy, sources familiar with the matter said. That financing would allow United to continue operations while restructuring under bankruptcy-court protection.

Rank-and-file United workers said they were worried about the possibility of layoffs, benefit cuts and worthless stock.

“We’ve given our blood and sweat out there,” said Daniel Kaulback, a baggage handler at O’Hare Airport in Chicago. “It’s not worth squat.”

Standard & Poor’s further downgraded United’s corporate credit rating, noting that nearly $1 billion in debt due next week already is considered in default. The debt would wipe out most of the airline’s cash.

Germany’s Lufthansa, which along with United belongs to the 14-member Star Alliance of airlines, said it was in talks about offering assistance to its embattled partner.

Lufthansa would want to secure any possible investment with assets such as planes or real estate, said Thomas Jachnow, spokesman for Europe’s No. 2 airline.

A United Airlines jet takes off from Seattle-Tacoma International Airport in SeaTac, Wash. United Airlines stock lost two-thirds of its value Thursday amid speculation that the carrier could do nothing to avoid bankruptcy.