This is the only article I've seen to date that details why, at the last minute, the door was cracked open again for United at the ATSB. Politics is ugly---one phone call from Denny Hastert and United has a third chance.
United's request for loan guarantee rejected
By Caroline Daniel in Chicago
A request by UAL's United Airlines for a $1.6bn loan guarantee was rejected on Thursday night, dealing a serious blow to efforts by the world’s second largest airline to emerge from bankruptcy protection.
The Air Transportation Stabilisation Board, which oversees the US's loan guarantee system, said two members - Ned Gramlich from the Federal Reserve and Brian Roseboro, treasury undersecretary for domestic finance - had voted to deny the application. Jeff Shane, transportation undersecretary, voted to defer a decision to next week.
However, in a twist that emerged after the ATSB issued its statement, the Treasury Department said it was open to reconsidering United’s case should it submit "an improved application in coming days".
The ATSB's decision is still a setback for the company, which has spent the past 18 months restructuring while in bankruptcy protection. The airline now faces a highly uncertain times ahead. The legal grounds under which it can reapply for a loan remain unclear.
The unexpected move by the Treasury, effectively overruling its own representative’s decision - has been spearheaded by John Snow, treasury secretary, who has come under considerable pressure this week from Dennis Hastert, the influential speaker of the House of Representatives, the lower house of the US Congress.
Mr Roseboro and Mr Gramlich were understood to be furious about the prospect of letting United reapply for the loan, according to several people involved in the talks. Mr Hastert's role is likely to ignite long-standing suspicions that the decision about United’s future, was always going to be made on political grounds, not purely econonic criteria, especially given the politically charged environment of an election year.
United Airlines said it was "perplexed by the announcement made by the ATSB. We have reason to believe we are in the midst of a process with the ATSB to make our application acceptable and that a decision was premature. We do not believe that the Board was made fully aware of the important modifications United was willing to bring to the table."
United executives this week had flown to Washington to negotiate further concessions, amid signs early in the week that their application was about to be turned down. Glenn Tilton, United's chief executive, and Jake Brace, the airline's finance director, met with ATSB officials all day Wednesday and most of Thursday to discuss last-minute measures.
The concessions are understood to have included introducing new equity investment, reducing the amount of the ATSB loan and reducing the time to repay it.
Political pressure in Washington was stepped up over the last few days amid fears of a possible vote to deny United’s application On Tuesday Mr Hastert rang Mr Snow to lobby on behalf of United, an intervention that is understood to have helped United continue to negotiate with ATSB officials.
Mr Hastert, in a statement, said: "Of course, I am disappointed that the ATSB did not yet approve the loan application submitted by United Airlines. It is my understanding that the ATSB decision may be premature, and that United Airlines may still be in the process of enhancing its application, to make it more acceptable to those who are making the decision."
The ATSB noted United’s cost-cutting efforts, but said a majority of the board had concluded that: "the likelihood of United succeeding without a loan guarantee is sufficiently high so as to make a loan guarantee unnecessary
United's request for loan guarantee rejected
By Caroline Daniel in Chicago
A request by UAL's United Airlines for a $1.6bn loan guarantee was rejected on Thursday night, dealing a serious blow to efforts by the world’s second largest airline to emerge from bankruptcy protection.
The Air Transportation Stabilisation Board, which oversees the US's loan guarantee system, said two members - Ned Gramlich from the Federal Reserve and Brian Roseboro, treasury undersecretary for domestic finance - had voted to deny the application. Jeff Shane, transportation undersecretary, voted to defer a decision to next week.
However, in a twist that emerged after the ATSB issued its statement, the Treasury Department said it was open to reconsidering United’s case should it submit "an improved application in coming days".
The ATSB's decision is still a setback for the company, which has spent the past 18 months restructuring while in bankruptcy protection. The airline now faces a highly uncertain times ahead. The legal grounds under which it can reapply for a loan remain unclear.
The unexpected move by the Treasury, effectively overruling its own representative’s decision - has been spearheaded by John Snow, treasury secretary, who has come under considerable pressure this week from Dennis Hastert, the influential speaker of the House of Representatives, the lower house of the US Congress.
Mr Roseboro and Mr Gramlich were understood to be furious about the prospect of letting United reapply for the loan, according to several people involved in the talks. Mr Hastert's role is likely to ignite long-standing suspicions that the decision about United’s future, was always going to be made on political grounds, not purely econonic criteria, especially given the politically charged environment of an election year.
United Airlines said it was "perplexed by the announcement made by the ATSB. We have reason to believe we are in the midst of a process with the ATSB to make our application acceptable and that a decision was premature. We do not believe that the Board was made fully aware of the important modifications United was willing to bring to the table."
United executives this week had flown to Washington to negotiate further concessions, amid signs early in the week that their application was about to be turned down. Glenn Tilton, United's chief executive, and Jake Brace, the airline's finance director, met with ATSB officials all day Wednesday and most of Thursday to discuss last-minute measures.
The concessions are understood to have included introducing new equity investment, reducing the amount of the ATSB loan and reducing the time to repay it.
Political pressure in Washington was stepped up over the last few days amid fears of a possible vote to deny United’s application On Tuesday Mr Hastert rang Mr Snow to lobby on behalf of United, an intervention that is understood to have helped United continue to negotiate with ATSB officials.
Mr Hastert, in a statement, said: "Of course, I am disappointed that the ATSB did not yet approve the loan application submitted by United Airlines. It is my understanding that the ATSB decision may be premature, and that United Airlines may still be in the process of enhancing its application, to make it more acceptable to those who are making the decision."
The ATSB noted United’s cost-cutting efforts, but said a majority of the board had concluded that: "the likelihood of United succeeding without a loan guarantee is sufficiently high so as to make a loan guarantee unnecessary
