United Airlines (NYSE: UAL) employees are surprised and angry today after the Air Transportation Stabilization Board rejected the company's plea for a $1.8 billion loan guarantee. Without it, United has said it will likely have to file for bankruptcy.

The ATSB's decision was surprising because the airline's unions and management had agreed to significant pay cuts in order to improve the company's financial picture. But the board said United's proposed business plan did "not position the company to meet the challenges of the current airline industry environment and to achieve long-term financial stability. Specifically, the plan is based on unreasonably optimistic revenue projections."

The board said it believes United would likely face another liquidity crisis in the next few years, even if it received the loan. The bottom line: The ATSB doesn't believe it (meaning the American taxpayers) would be repaid.

United says it will discuss the matter with all parties involved and consider whether to submit an improved proposal.

Should it be forced to file Chapter 11, the airline vows to keep flying throughout the reorganization. Current stockholders will likely see their shares become worthless, however. The stock opened at $1.28 this morning, down 59%, before trading was halted.

If you're a United traveler, should you worry about your frequent flier miles? Most experts think they're safe, according to the Associated Press. They would likely survive intact through any bankruptcy proceedings, and even if the airline goes out of business, competitors would probably honor 25% to 50% of the miles.