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United Airlines says bankruptcy possible

UAL Corp, the parent of United Airlines, said on Wednesday said it may be forced to file for bankruptcy protection if it cannot drastically lower its costs, its first such admission since losing record amounts of money after the Sept 11 attacks.

UAL said it is changing its business plan and refiling a loan guarantee application with the federal government as it moves to slash costs.

The move was just the latest in the hard-hit airlines sector, which has been struggling to stay afloat since the Sept 11 attacks.

American Airlines, the world's largest air carrier, on Tuesday said it would cut a further 7,000 jobs as it tries to restore profits in the wake of the post-Sept 11 downturn, and US Airways Group, the No 6 U.S. carrier, on Sunday filed for bankruptcy protection.

"Unless we lower our costs dramatically, filing for bankruptcy protection will be the only way we can ensure the company's future and the continued operation of our airline," said Jack Creighton, UAL chief executive, in a statement.

A strategic plan to address long-term challenges will include code-sharing with other airlines, alliances and the use of regional jets, among other things, UAL said in a regulatory filing.

United, the No 2 US carrier, faces nearly $1 billion in debt repayments in the fourth quarter, and says it has insufficient access to the capital markets to make that payment.

UAL is seeking federal government guarantees for $1.8 billion of a $2.0 billion loan. It said it has allotted 30 days to conclude discussions with stakeholders about additional participation in the financial recovery plan.

Shares of UAL fell to their lowest level in decades on the New York Stock Exchange on Wednesday, closing at $2.45, down 10 per cent.

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