Administration Insiders Believe Feds Will Reject UNITED AIRLINES Loan Application
Mon Nov 18 2002 10:01:51 ET
UAL Corp., parent of United Airlines, is fighting an uphill battle to get a $1.8 billion federal loan guarantee that the airline says is essential if it is to avoid filing for protection of the bankruptcy courts before the end of the year, the WALL STREET JOURNAL reported on Monday.
"The staff of the Air Transportation Stabilization Board is scrutinizing the company's business plan skeptically, and the betting among Bush administration insiders familiar with the board's thinking is that the board, which has three voting members, eventually will reject the application or set conditions so onerous that UAL will reject them."
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"The board, however, has yet to make even a tentative decision," the JOURNAL claims.
UAL "had hoped to get the green light for the loan guarantee soon so it could raise $2 billion in fresh capital and stay out of bankruptcy court. But the company is burning through more than $7 million in cash a day, and it faces a $375 million debt repayment on Dec. 2. United said in a recent federal filing that without the loan guarantee, and the cost reductions that it has to make to get the guarantee, it doesn't expect to be able to have sufficient liquidity to support its obligations through year end.
"It recently succeeded in postponing $500 million in additional debt coming due in the next few weeks."
