FROM THE OFFICE OF PUBLIC AFFAIRS
To view or print the PDF content on this page, download the free Adobe® Acrobat® Reader®.
June 17, 2004
JS-1733
ATSB Decision on United Air Lines
The Air Transportation Stabilization Board (Board) announced today that it denied the application submitted by United Airlines, Inc. for a $1.6 billion federal guarantee of a $2.0 billion loan under the Air Transportation Safety and System Stabilization Act (Act).
A majority of the Board determined that a guaranteed loan to United is not a necessary part of maintaining a safe, efficient, and viable commercial aviation system in the United States, a requirement of the Act. The Board notes the positive steps the company has taken since entering bankruptcy in 2002 to lower its costs, strengthen its competitive position, and improve its governance structure. Moreover, the Board believes that airline credit markets have been improving since late 2001 and 2002, the period during which the Board granted most of its approvals for loan guarantees, increasing the likelihood of United succeeding without a loan guarantee. Given these circumstances, a majority of the Board believes that the likelihood of United succeeding without a loan guarantee is sufficiently high so as to make a loan guarantee unnecessary. Finally, the Board considered proposals made by United in a series of meetings this week. A majority of the Board believes that these revisions do not change their view of the necessity of a federal loan guarantee.
Considering all of the foregoing factors, Chairman Edward Gramlich and Under Secretary of Treasury for Domestic Finance Brian Roseboro voted to deny the application. Under Secretary of Transportation for Policy Jeffrey Shane voted to defer the decision for one week pending further Board discussions with United regarding its most recent proposals.
The Board conducted its review pursuant to the standards set out by the Act and by the implementing regulations promulgated by the Office of Management and Budget. The Board considered all relevant information, including information obtained during numerous meetings between United, Board staff, and agency representatives during 2003 and 2004.
The Board's letter to United is attached.
Additional information about the ATSB is available on its web site,
http://www.ustreas.gov/offices/domestic-finance/atsb/.
REPORTS