A great victory against the Nanny State.
Feds Reject United Airlines Loan Plea
Wed Dec 4, 6:23 PM ET
by Jeannie Aversa, Associated Press Writer
WASHINGTON (AP) - A federal panel rejected cash-strapped United Airlines' request for a $1.8 billion loan guarantee Wednesday, dealing a setback to efforts by the nation's second-largest carrier to avoid bankruptcy.
The Air Transportation Stabilization Board's decision came as the Chicago-based carrier scrambled to pare costs and avoid a bankruptcy filing.
"The board believes that the business plan submitted by the company is not financially sound," the board said in a statement.
United had asked that the government guarantee $1.8 billion of a $2 billion private loan package. Without the guarantee and the loan, the airline has said it would probably have to file for Chapter 11 bankruptcy protection.
The $1.8 billion is the largest request received by the board, double the amount that US Airways was conditionally granted earlier this year.
The board was established by Congress last year to oversee a $10 billion loan program, part of an airline industry bailout after last year's Sept. 11 terrorist attacks.
The board, in its statement, also said that United's plan "does not support the conclusion that there is a reasonable assurance of repayment and would pose an unacceptably high risk to U.S. taxpayers."
Two of the three board members — Treasury's undersecretary for domestic finance, Peter Fisher, and Federal Reserve Board member Edward Gramlich — rejected United's request. The third member, Kirk Van Tine, the general counsel of the Transportation Department, voted to defer a decision until Dec. 9 to allow United to submit additional financial information.
After losing an industry-record $2.1 billion in 2001, United is on course to exceed that loss this year as it struggles amid a weak economy and a decline in business travelers.
A bankruptcy would be unlikely to have any immediate effect on passengers. United has said it would continue flying its normal schedule, as US Airways has been doing since its Chapter 11 filing in August. |
