Washington ? The biggest single corporate casualty of 9-11 is United Airlines, the nation’s second-largest airline carrier. Its parent, UAL Corp., has filed for bankruptcy under Chapter 13, which gives the company protection from its unsecured creditors while it attempts to reorganize. This contrasts with Chapter 7, which dissolves the company and distributes its remaining assets among its creditors. Chapter 13 entails court approval of a viable plan; but for UAL, a viable plan is not possible. The company admits it will lose up to another $1 billion between now and the end of January. UAL cannot avoid Chapter 7.

This is a regrettable situation. United became a 55 percent employee-owned company in 1994, but only three out of 12 board members are employee representatives. So, from the beginning, employee ownership has been a facade, and sources inside the company tell us that low morale has been a long-standing problem. And now, those employees have seen their stock plummet from $100 per share in 1997 to nothing today.

Those 80,000 employees have regularly given financial concessions to protect their jobs and to keep the carrier afloat, but bad management decisions have undermined those efforts. After years of concessions, including an acceptance of stock for some wages, the employees are not even likely to have jobs to show for the effort.

The bankruptcy came after the federal government rejected the company’s request for loan guarantees – a program established as the Air Transportation Stabilization Act to help airlines caught in the economic wake of 9-11. According to UAL Chairman and CEO Glenn F. Tilton, the rejection came after the company explained that it would use the loan guarantees to fight competition from JetBlue and Southwest Airlines, two well-run discount carriers. That such an explanation ran counter to free-market concepts of efficiency and good management seems not to have occurred to the professionals pleading United’s case.

This is why the government and industry analysts claim that United is sinking due to problems that preceded 9-11, an analysis that is both accurate and inaccurate.

Clearly, United did not keep pace with the deregulatory environment of the airways, which spawned new competitors like JetBlue and Southwest. On the other hand, 9-11 crippled the company’s ongoing efforts to adapt. When the terrorist attacks came, United still had ample funds and was attempting to address the new economic dynamics, albeit more slowly than good management should have been expected to do.

But it is now too late to make the dramatic steps that should have been taken prior to 9-11. United’s management kept focusing on employee concessions instead of structural changes. The JetBlue model, for example, uses one type of plane, which lessens its parts and maintenance problems. It encourages carry-aboard meals, because it doesn’t provide them (which spawned an improvement in food offerings at gateside). It provides amenities such as leather seats and individual televisions, as well as immaculate cabins. And it provides low fares, not occasional promotions.

Southwest uses a different model. It follows the mold of low fares, low service and cramped quarters. It has become the New York subway of the air – and it has found its niche.

United, on the other hand, followed a reactive business plan of lowering fares in response to other airlines’ fare reductions and of fighting to exclude competition from lucrative routes, instead of discouraging competition by instituting those measures necessary to ensure that it was providing the best service and prices.

Prediction: UAL will either survive as a dramatically smaller airline or fold altogether, and its remaining employees will end up without equity in the company.