Friday, June 18, 2004

United loses bid for loan support

By Jeannine Aversa
The Associated Press

WASHINGTON - United Airlines lost its bid for $1.6 billion in federal loan guarantees Thursday, a blow to the nation's second-largest airline as it tries to emerge from bankruptcy.

It was the second time that the federal Air Transportation Stabilization Board has turned down the cash-strapped company.

Two members of the board - Treasury Department's undersecretary for domestic finance, Brian Roseboro, and Federal Reserve member Edward Gramlich, voted to deny the company's request. The third member, Jeffrey Shane, an undersecretary at the Transportation Department, voted to defer a decision for one week.

The Treasury Department did say, however, that the airline has an opportunity to resubmit an application.

"Treasury could not support the application as presented," the department said in a separate statement. "Should United submit an improved application in the coming days, Treasury is open to reconsidering it."

The Transportation Department, in a statement, also said it stands ready to consider such a filing by United.

Five days after the being turned down by the board the first time, on Dec. 4, 2002, for $1.8 billion in federal loan guarantees, the airline filed for Chapter 11 bankruptcy protection.

United Airlines chief executive Glenn Tilton, in an interview last week, said subsequent restructuring has left the company on sufficient financial footing to be able to emerge from bankruptcy by year's end, even if its request for federal loan backing was rejected.

The company's restructuring steps have included $2.5 million in annual labor cost reductions and aircraft refinancing.

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