Thu, Dec 18, 2003
But Will The Feds Go Along This Time?
UAL, parent company to
United Airlines, says it now has the $2 billion it needs to exit
bankruptcy. The airline reported Wednesday that it had secured the
financing from JP Morgan and Citigroup.
But there are conditions. Both financial groups want $1.6
billion in loan guarantees from the federal government's Air
Transportation Stabilization Board.
That may be a tricky proposition.
The board is supposed to pass out $10 billion in loan guarantees
to an airline industry crushed by the 9/11 terror attacks. But a
year ago, it rejected United's loan request, saying the company's
projections were not only incomplete, they were unfounded. A week
later, United was in federal bankruptcy court.
But things have changed over the past year. What UAL had sensed
was in the wind last December has indeed come to pass. And lenders
say the airline itself has changed. Bill Repko, managing director
of JP Morgan's restructuring unit, said, "United has done all the
right things to position itself for a successful exit."
Under the plan, both JP
Morgan and Citibank would contribute $800 million in
government-backed loans. In addition, they'd each put up $200
million in "at-risk" money.
"The competitive terms of this financing package -- especially
the willingness of both banks to include a substantial amount of
at-risk funding -- reflect the extraordinary progress United has
made this past year and the credibility of our plan for the
future," said UAL CEO Glenn Tilton.
If all goes as planned, United plans to emerge from bankruptcy
around the middle of next year.
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