United said in a regulatory filing it plans to refile an application with the Air Transportation Stabilization Board for $1.8 billion in federal loan guarantees, which will include a new business model. But the carrier said there can be no assurances it will win such backing for private sector loans, even if it does reach cost-cutting deals with various groups.

The airline has given itself 30 days to cut the deals. So far, only pilots and salaried and management workers have agreed to pay cuts.

Shares of United Airlines parent UAL Corp. , pummeled all year, plunged further on Wednesday. They fell to $1.87 on Instinet after the airline said it might file for bankruptcy. The shares had closed at $2.45 on the New York Stock Exchange.

In October 1997, when the U.S. economy was booming, the shares traded at more than $100.

DOG DAYS OF SUMMER

United's bankruptcy warning was just the latest bad news in the aviation industry this week.

On Sunday, US Airways Group Inc. filed for Chapter 11 bankruptcy protection as a historic downturn in U.S. aviation continues to unfold. US Airways, based in Arlington, Virginia, flies a heavy East Coast schedule.

AMR Corp.'s American Airlines of Dallas/Fort Worth on Tuesday said it would shrink itself, lay off 7 percent of its work force and implement structural changes to try to bring back profits. Shares of AMR rose closed slightly lower Wednesday at $8.68.

Major U.S. airlines have lost more than $10 billion since the Sept. 11 attacks decimated air travel and cheap fares proliferated. Most big carriers face significant losses this year as well.

United, based in Elk Grove Village, Illinois, asked the ATSB earlier this summer to back $1.8 billion in loans, as it faces a fourth-quarter debt payment of nearly $1 billion. It has already received $782 million in direct cash aid as part of the landmark bailout package passed after the attacks.

So far, no official word has emerged from Washington on the loan guarantee request, but the buzz is not encouraging.

A source in Washington familiar with the loan guarantee process says the board is looking for "vigorous and substantial" efficiencies from United.

"They have been told for some time that their labor concessions have been insufficient," the source said.

A spokeswoman for the board would not comment on United's chances for a loan guarantee, only saying the application was under review.

GOING ON THE OFFENSIVE

In a taped message to employees this week, UAL Chief Executive Jack Creighton said indications from the government are that it wants more concessions from the airline's unions.

"Over the last month or so, we have had a number of conversations with decision makers across Washington," Creighton said. "From those conversations, we've gotten the clear feeling that we need more participation from all of our stakeholders in our cost-cutting efforts. They have indicated to us that participation must be broader, deeper and longer."

Shares of Boeing Co. , the largest commercial airplane maker, also fell on Tuesday and again on Wednesday on concerns over lingering troubles in the airline industry. In a regulatory filing, the company said its Boeing Capital Corp. subsidiary had $1.27 billion in assets related to United, nearly 12 percent of its portfolio.

United, the biggest customer of the Boeing financing arm, was current on its payments as of the filing, Boeing said.

PRESSURE BUILDING

Of United's major unions, only pilots have agreed to wage cuts of about 10 percent in return for stock and raises down the road. Employees own 55 percent of the airline following a 1994 Employee Stock Ownership Plan, which also gave pilots and machinists seats on the board of directors.

Salaried and management workers, who are not unionized, are also taking pay cuts.

Pilots spokesman Steve Derebey said on Wednesday pilots are frustrated that other unions are not cooperating, as they all face huge losses in their ESOP shares if bankruptcy ensues.

"We just wish that the other employee groups would get on board as we have and face reality," Derebey said. "It's time for the others to wake up and smell the coffee. Pilots have led this company out of worse scenarios than we're in now."

Late Wednesday, the International Association of Machinists, said in a statement it supports the loan guarantee application and is "ready to continue discussions with United regarding measures to eliminate operating efficiencies that cost the company millions of dollars annually." It specifically avoided talking about concessions.

In bankruptcy filings, common stock holdings are generally rendered worthless. The preferred shares in the ESOP holdings are also not likely to have much if any value, analysts said, coming far down the list of which creditors get paid first.

Jeff Zack, a spokesman for the Association of Flight Attendants, said United has never engaged his union in serious discussions, unlike its talks with the pilots.

"They refuse to acknowledge our ground rules," he said.

(China Daily August 15, 2002)