Aerospace manufacturers took a battering on Wall Street late last week after United Airlines' bid for a $1.8 billion loan guarantee was rejected. The Air Transport Stabilization Board (ATSB) decision means the airline will almost certainly seek bankruptcy protection this week.
Share prices at Boeing, Honeywell and Pratt & Whitney parent United Technologies all dropped heavily last week following the ATSB's decision that United's revenue predictions were too optimistic. However, prices rose for American Airlines, Continental Airlines and Delta Air Lines, with investors judging that United's demise would improve their prospects. The carriers had lobbied against United's application.
Star Alliance partner Lufthansa had planned to give United a $800 million bail-out, but this was dependent on the ATSB agreeing to the loan guarantee.
The ATSB's rejection came a day before United's machinists were to vote on revised pay and contract concessions, which union officials had predicted would be in the airline's favour. The union cancelled the ballot after the decision, which it called "unfair and unwarranted".
Source: Flight International
