When United Pawned Old Jets, Bond Traders Sent a Stark Warning
- Airline pulls $2.25 billion of junk bonds backed by planes
- Firms are pledging collateral in bid to raise cash on shutdown
United Airlines aircraft.
Photographer: Daniel Acker/BloombergThis article is for subscribers only.
Late on Friday, after some 48 hours of frantic attempts to lure investors to their faltering bond sale, executives at United Airlines let it be known that the deal was dead.
It was an odd moment, stuck smack in the middle of one of the busiest corporate bond booms ever, a period in which investors have shown themselves to be receptive to almost any debt offer backed by good collateral. But this last part was where United got in trouble. For collateral, it had scraped together 360 old jets, some of which analysts considered would be nearly worthless in a few years.