United stock plunges after loan guarantee is denied CHICAGO (AP) =97 Trading in United Airlines' stock was halted after it=20 plunged 59% Thursday, a day after the world's second-largest carrier lost=20 its request for government loan backing it said was needed to keep it out=20 of bankruptcy. Amid heightened speculation on Wall Street that a bankruptcy= =20 filing may be imminent, the New York Stock Exchange stopped trading in=20 United's shares because of "news that's pending that could materially=20 affect the trading of the stock," NYSE spokesman Ray Pellechia said. A=20 spokesman for the airline who declined to be named said there were no plans= =20 for an immediate announcement. (Related: Loan denial surprises United=20 workers) Before trading was stopped, shares in United parent UAL Corp.=20 (UAL) opened down $1.84, or 59%, to $1.28 =97 their lowest level in more= than=20 40 years. Analysts said the rejection of United's request for $1.8 billion in federal= =20 loan guarantees all but ensures a Chapter 11 bankruptcy filing. It would be= =20 the largest bankruptcy in airline industry history. United is the largest=20 carrier at Denver International Airport. Chief executive Glenn Tilton didn't comment on the likelihood of=20 bankruptcy, assuring passengers and United's 83,000 employees Wednesday=20 night that "whatever course we chart, it should be emphatically clear that= =20 United will continue to fly." Barring an unlikely turn of events, that course will almost certainly take= =20 it into federal bankruptcy court as soon as this week. "We believe=20 bankruptcy is inevitable," J.P. Morgan analyst Jamie Baker wrote in a note= =20 to investors Thursday. "I can't imagine them avoiding it unless someone=20 writes them a check for $2 billion," said Ray Neidl of Blaylock and= Partners. Cash-starved United has said for months that without government backing, it= =20 couldn't get the $2 billion private loan it needs to avoid bankruptcy. It=20 faces $920 million in debt payments due next week, which would wipe out=20 most of its fast-dwindling cash. Investors see it as increasingly inevitable. In after-hours trading=20 Wednesday after the announcement, they quickly drove the stock down to its= =20 lowest level in decades. Further sealing United's fate, its mechanics=20 canceled a vote scheduled Thursday on $700 million in wage cuts that the=20 carrier said was needed immediately in order for it to stay out of=20 bankruptcy. Union leaders said the panel's ruling had rendered the vote=20 moot. United's unions assailed the decision by the government panel, which= =20 was created last year to help the financially strapped airline industry=20 recover after the Sept. 11 terrorist attacks. "We were ready to partner=20 with United, the union coalition and the government to return United=20 Airlines into the nation's premier carrier," said Tom Buffenbarger,=20 president of the Machinists' union that represents the 13,000 mechanics and= =20 aircraft cleaners who were to have voted. "Unfortunately, the United States= =20 government walked out on that partnership." United, the world's largest carrier until American Airlines overtook it=20 last year, traces its problems to a decline in passengers because of the=20 economy and the terrorist attacks, an increase in competition from smaller= =20 discount airlines and failed strategies. It has lost more than $4 billion=20 since the middle of 2000 and is on pace for an industry-record loss=20 exceeding $2 billion for the second straight year. The government board=20 said that despite United's efforts to pare costs, including $5.2 billion in= =20 proposed labor cutbacks, "the business plan submitted by the company is not= =20 financially sound." The board said United's plan "does not support the=20 conclusion that there is a reasonable assurance of repayment and would pose= =20 an unacceptably high risk to U.S. taxpayers." Tilton expressed=20 disappointment but didn't say whether the company would file for bankruptcy= =20 or file a revised proposal. "We appreciate, however, the possibility=20 expressed to consider an improved proposal at a later date," he said. "We=20 will consult with our union leaders and other stakeholders and quickly=20 determine what step to take next." Two of the three board members =97 Treasury's undersecretary for domestic=20 finance, Peter Fisher, and Federal Reserve Board member Edward Gramlich =97= =20 rejected United's request. The third member, Kirk Van Tine, the general=20 counsel of the Transportation Department, wanted to defer a decision until= =20 Dec. 9 to allow United to submit additional financial information. "This is not just about costs; it's about a business plan that is=20 fundamentally flawed," Fisher said. The board's executive director, Daniel= =20 Montgomery, told reporters that United still has an opportunity to file a=20 revised request with the board even if the airline were to file for=20 bankruptcy. The head of United's pilots union held out hope of avoiding a= =20 bankruptcy filing, although he did not specify how that might be=20 accomplished. "We will work very hard over the next few days with both the= =20 company and union coalition to evaluate the situation and respond as=20 quickly as possible to achieve an out-of-court recovery for the company,"=20 said Paul Whiteford, head of the United pilots union. In bankruptcy, United's stock shares would probably become virtually=20 worthless and it would lose control of its restructuring to a judge. The=20 airline is 55% owned by its employees. A person familiar with United's=20 situation said the airline was close to securing $1.5 billion=20 debtor-in-possession financing that would be needed in order to keep it=20 operating while in bankruptcy. The airline has been in negotiations with=20 several banks organizing the loan, including J.P. Morgan, Bank One and GE=20 Capital, a unit of General Electric, said the person, speaking on condition= =20 of anonymity. Aaron Gellman, an airline industry expert and professor at=20 Northwestern University's Transportation Center, said it was "highly=20 likely" United would file for bankruptcy following the ruling. He said a=20 last-minute cash source, such as a coalition of United's international=20 partners in the Star Alliance and manufacturers, is an improbable=20 scenario. United's rivals lobbied furiously against its bid for government= =20 assistance. But some passengers flying United on Wednesday said the=20 government should help it stay in business. "We need the competition to=20 keep the fares lower," said Courtney Burkholder, 31, of Lincoln, Neb., as=20 she walked through Chicago's O'Hare International Airport. "Generally, it=20 seems unfair that the airlines suffered for the terrorist attacks." Only two major airlines, America West and US Airways, have gotten help from= =20 the board. But US Airways still ended up filing for bankruptcy protection=20 in August. Analysts say United will emerge from bankruptcy a smaller,=20 changed airline, assuming it emerges at all. "If they make peace with=20 labor, they will come out of Chapter 11 stronger than they've ever been,"=20 said Darrell Jenkins, head of George Washington University's Aviation=20 Institute. "If they have any travel disruptions due to labor unrest, then=20 they become the next Eastern Airlines." Eastern went under in 1989. The owner of Roger's Trinbago Site: Roj (Roger James) *************************************************** escape email mailto:ejames@escape.ca Trinbago site: http://www.tntisland.com CBC Website http://www.tntisland.com/caribbeanbrassconnection/ The Trinbago Site of the Week: (Island Events) http://www.islandevents.com (Island Events) courtesy of Roj Trinbago Website & TnT Web Directory Roj's Trinbago Website: http://www.tntisland.com TnT Web Directory: http://search.co.tt *********************************************************