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Few Major Airlines Ask for U.S. Loans

Aviation: Just four of the nation's 11 biggest carriers apply for aid. Stock requirement may have played a role.

June 29, 2002|From Associated Press

Less than half of the major U.S. airlines sought government-backed loans by Friday under a program created to help the industry recover from the Sept. 11 terrorist attacks.

Of the country's 11 largest passenger airlines, only four--America West, American Trans Air, United Airlines and US Airways--asked the Air Transportation Stabilization Board to lend them money to keep flying.

The loan program required airlines to provide detailed information and let the government buy stock in their companies, a provision modeled after the Chrysler bailout.

"Once they actually looked at what the deal was, a lot of them said, 'We'll pass,' " said Dean Headley, associate professor of marketing at Wichita State University and co-author of an annual study on airline quality. "That doesn't mean they're all out of the woods, but the baggage that came with the loans is something they didn't want to deal with."

Nine smaller airlines have applied for help under the $10-billion loan program, according to the Air Transportation Stabilization Board.

Four submitted applications shortly before Friday's deadline: Aloha, Frontier, Great Plains and World. The others are Evergreen International, National and Spirit, whose applications still are pending, and Frontier Flying Service and Vanguard, both of which were rejected.

So far, the board has approved one application, that of America West, which received $380 million in government-backed loans in exchange for warrants to buy 5.3% of the airline's stock.

Those still waiting to hear about their applications include United Airlines, which sought $1.8 billion in loan guarantees; US Airways, which asked for $900 million in backing; and American Trans Air, which requested $165 million.

Representatives of Alaska, American Eagle, Delta, Continental, Northwest and Southwest all said Friday that their airlines would not ask for government help.

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