Oh Dear
From The BBC
United Airlines (UAL), the world's second largest carrier, has filed for bankruptcy protection in a US court, marking the air travel sector's biggest corporate collapse to date.
The move is designed to give the airline temporary protection from its creditors while it puts together a restructuring plan.
The cash-strapped airline had been expected to file for bankruptcy ever since last-ditch attempts to secure an emergency loan from the government fell through last week.
UAL had been seeking a loan worth $1.8bn (£1.15bn) from the Air Transport Stabilisation Board (ATSB), set up to help US airlines in the wake of September 11.
Eleventh hour
The company has reportedly landed a deal with its lenders, including CIT Group, JP Morgan Chase, Citibank and Bank One, which will provide the $1.5bn required to keep the company flying while a restructuring takes place.
UAL is 55% owned by staff, with representatives of its pilots and mechanics occupying seats on its board.
United staff have been asked to accept pay cuts
"We think that bankruptcy filing is probably the best thing that could happen to UAL," said analysts at Deutsche Bank Securities earlier on Monday.
UAL has been seeking wage and benefit concessions from its staff in a bid to reduce its costs and mounting debt pile.
Rising debts
UAL lost $2.1bn last year and is expected to lose $2.5bn this year.
It has $920m in debt repayments due in the next week.
Last week, the group's shares lost over two-thirds of their value following news of the loan rejection, ending the week at just 93 cents.
United Airlines' is the second collapse in the US airline sector this year after US Airways filed for bankruptcy protection in August.