Airline giant facing bankruptcy

Trading in United Airlines’ shares was halted in the US today after they plunged 59%, 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.

Amid heightened speculation on Wall Street that a bankruptcy filing may be imminent, the New York Stock Exchange stopped trading in United’s shares because of ”news that’s pending that could materially affect the trading of the stock,” NYSE spokesman Ray Pellecchia said.

But the airline said there were no plans for an immediate announcement.

Analysts said the Air Transportation Stabilisation Board’s rejection of United’s request for £1.14bn in federal loan guarantees ay all but ensures a bankruptcy filing. It would be the largest bankruptcy in airline industry history.

Chief executive Glenn Tilton tried to reassure passengers and United’s 83,000 employees, saying, “Whatever course we chart, it should be emphatically clear that United will continue to fly.”

But barring a dramatic turn of events, that course will almost certainly take it to federal bankruptcy court as soon as this week.

“We believe bankruptcy is inevitable,” said JP Morgan analyst Jamie Baker.

“I can’t imagine them avoiding it unless someone writes them a check for two billion dollars,” said Ray Neidl another airline analyst.

Cash-starved United has said for months that without government backing, it couldn’t get the £1.2bn private loan it needs to avoid bankruptcy. It faces £585m in debt payments due next week, which would wipe out most of its cash.

Further sealing United’s fate, its mechanics cancelled a vote scheduled for Thursday on £445m in wage cuts the carrier said it needed immediately to stay out of bankruptcy.

Germany’s Lufthansa, which like United is part of the 14 member Star Alliance of airlines, which includes British airline BMI, said it was in talks about offering assistance to its embattled partner.

“Lufthansa won’t leave a good friend in the lurch,” said Lufthansa spokesman Thomas Jachnow.