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United's ATSB Chances Slim; Political Winds Swirl
By Steve Lott
Aviation Week
06/22/2004
United as early as today will resubmit its proposal to the Air Transportation Stabilization Board (ARSB) for the third time with additional equity it hopes will sway two of the three board members, but its chances are slim, sources said. United has not specifically identified how much equity it will add to its proposal, but CEO Glenn Tilton on Friday said the airline would make "modifications to our application that would make it acceptable to the board" (DAILY, June 21). However, several sources familiar with the board said sweetening the equity terms of its proposal may not be enough to overturn last week's ATSB rejection.
The law that established the ATSB said an approval can be granted if the loan is necessary "to maintain a safe, efficient and viable commercial aviation system in the United States," the airline doesn't have access to the private debt market, and "the intended obligation by the borrower is prudently incurred."
Last week, the ATSB specifically stated that the first two criteria were not met. It did not discuss the third criterion and while additional equity from United would help its case, it does not change the fact that it does not meet the first two criteria. Political winds are also swirling in Washington that may hurt United's chances.
Sen. Peter Fitzgerald's (R-Ill.) office told The DAILY he is considering calling a congressional hearing into the possibility that political pressure was applied on behalf of United, and he may urge the Transportation Dept. to investigate. The Treasury Dept.'s ATSB representative Brian Roseboro was also frustrated by last week's events and is contemplating stepping down from the board. The Treasury Dept. said there were no changes to the board as of press time.
By Steve Lott
Aviation Week
06/22/2004
The law that established the ATSB said an approval can be granted if the loan is necessary "to maintain a safe, efficient and viable commercial aviation system in the United States," the airline doesn't have access to the private debt market, and "the intended obligation by the borrower is prudently incurred."
Last week, the ATSB specifically stated that the first two criteria were not met. It did not discuss the third criterion and while additional equity from United would help its case, it does not change the fact that it does not meet the first two criteria. Political winds are also swirling in Washington that may hurt United's chances.
Sen. Peter Fitzgerald's (R-Ill.) office told The DAILY he is considering calling a congressional hearing into the possibility that political pressure was applied on behalf of United, and he may urge the Transportation Dept. to investigate. The Treasury Dept.'s ATSB representative Brian Roseboro was also frustrated by last week's events and is contemplating stepping down from the board. The Treasury Dept. said there were no changes to the board as of press time.
