Talks are under way to secure a $1.5 billion loan to keep United flying, sources said.
CHICAGO >> As United Airlines' stock sank below a dollar a share today, its chief executive told employees in a recorded message that a Chapter 11 bankruptcy filing by the nation's No. 2 airline was "more likely."
United could file for
Investors flee UAL,
sending stock under $1
By Eric Fidler
"We have been preparing for a Chapter 11 filing for months," CEO Glenn Tilton's message said. "Chapter 11 becomes a more likely outcome because it allows us to restructure and to continue to serve our customers while we do it."
Shares in parent UAL Corp. fell 7 cents to 93 cents a share on the New York Stock Exchange -- the second day of a selloff following the rejection of its request for a $1.8 billion loan guarantee.
Sources familiar with the process, who spoke on condition of anonymity, said United was preparing to file for Chapter 11 bankruptcy Sunday. The carrier was completing the terms of a $1.5 billion debtor-in-possession loan, the sources said. The loan would enable the airline to keep flying in bankruptcy.
United spokesman Rich Nelson confirmed today that the UAL board plans to meet tomorrow, but he otherwise declined comment on the airline's financial status or plans.
Tilton has said 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's customers are uneasy, but many passengers seem willing to stick with the carrier.
Karen Hagler, who was flying from Denver to San Francisco, said she hoped United could stay afloat.
"I think we need the airlines we have. We need competition," she said.
Tony Singfield, traveling from Denver to Montana, said he flies United frequently but was worried about the attitude its employees would have in the face of possible layoffs.
"I've always had good service with United and I know that service will continue to be good, but the concern is just the attitude of the employees and how will they respond to the situation," he said.
United, the world's largest airline until American overtook it last year, traces its problems to a drop in passengers because of the weak economy and the September 2001 terrorist attacks, an increase in competition from smaller discount airlines and failed business strategies.
Many employees blame management.
"There is no business plan," said Mike Ommundson, a mechanic at Chicago's O'Hare International Airport.
"They brought in people with no airline experience" to manage the company, he said. "You have no respect for them."
After the federal Air Transportation Stabilization Board rejected the loan guarantee Wednesday, United's mechanics canceled a vote Thursday on $700 million in wage-and-benefits cuts that the airline said were needed to avert bankruptcy.
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