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Updated from 11:35 a.m. EST

A debt analyst said bankruptcy is virtually inevitable for United Airlines after mechanics refused to agree to a package of urgently needed pay cuts. The sentiment was reflected in the stock price of parent

UAL Corp.

(UAL) - Get United Airlines Holdings, Inc. Report

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, which plummeted Friday morning.

Standard & Poor's lowered its long-term corporate credit rating on UAL to triple-C-minus from triple-C, sending the shares into a tailspin; they closed down $1.13, or 31%, to $2.51.

UAL desperately needs to cut about $5 billion from its cost structure in order to secure $1.8 billion in federal loan guarantees needed to keep the airline out of Chapter 11. Other labor groups have accepted the concessions, but those agreements expire at the end of the year unless every constituency has signed on. The mechanics rejected a 7% pay cut, or about $700 million over 5.5 years.

"The mechanics' vote makes bankruptcy virtually inevitable," wrote S&P credit analyst Philip Baggaley. The company has less than $1 billion in cash reserves and is consuming about $7 million in daily operating losses. If cash balances fall much further, S&P warned, current reorganization plans, which call for $2 billion debtor-in-possession credit facility, could be also be in jeopardy.

The nation's second-biggest airline has a $375 million debt payment due this Monday. S&P's Baggely expects it to miss the Dec. 2 payment and use a 10-business-day grace period in an attempt to salvage a labor agreement and secure the federal loan guarantee needed to stave off bankruptcy. The airline said it will initiate "immediate discussions" with leadership of the International Association of Machinists District 141-M, in an effort to secure contract modifications that will achieve the same savings sought in the agreement that was not ratified. Still, Baggaley deems it "unlikely that a revised agreement can be negotiated and approved in time" to avoid default.