United Airlines has lost its bid for £1bn (€1.5bn) in US government loan guarantees, in a blow to the second-largest American airline as it tries to emerge from bankruptcy.

The United Airlines board of directors held a special meeting as union leaders acknowledged that a bankruptcy filing by the world’s second largest airline appeared imminent.

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.

United Airlines is to axe 1,250 jobs and close three reservation centres as part of cost-cutting efforts aimed at saving the troubled US carrier about $100m (€102.7m) a year.

United Airlines's struggling parent company may file for bankruptcy this autumn unless it can cut costs.