The federal government denied United Airlines' application for a $1.8 billion loan guarantee, a move that all but ensures the nation's second-largest airline will have to file for bankruptcy protection.

The Air Transportation Stabilization Board ruled that United's business plan "was not financially sound" and would "pose an unacceptably high risk to U.S. taxpayers."

Even before last year's terrorist attacks, many major airlines, including United, were losing millions of dollars a day as the weakened economy prompted many high-paying business travelers to buy cheaper tickets or not to fly. After the attacks, Congress created a $15 billion airline industry assistance package, including $10 billion in loan guarantees. Several carriers have won guarantees, and several others, including Arlington-based US Airways, received conditional approval. Still, the industry is projected to lose $8 billion this year -- with United accounting for an estimated $2.3 billion.

Without the loan guarantee, sources close to United have said it would have to file what would be the largest U.S. airline bankruptcy ever. United has 70,000 employees and 40 million frequent fliers. A bankruptcy filing could wipe out the value of the 55 percent ownership interest held by United employees, who in 1994 traded millions of dollars in pay concessions for control of the airline.

While United had focused largely on securing new wage concessions from employees, ATSB officials said they rejected the application because United did not present a plan that would sufficiently boost revenue to achieve financial stability.

-- Keith L. Alexander

and Jonathan Finer

The government decision makes it likely that United will file for bankruptcy protection.