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UAL Loan Bid Denial in Review

June 25, 2004|From Times Wire Services

The U.S. Treasury's inspector general will begin a preliminary inquiry into the agency's actions during review of a loan guarantee request by UAL Corp.'s United Airlines, a spokesman said Thursday.

The informal inquiry by acting Inspector Gen. Dennis Schindel follows Sen. Peter Fitzgerald's (R-Ill.) written request Tuesday for an investigation into whether Treasury Undersecretary Brian Roseboro, who rejected United's request for a $1.6-billion loan guarantee, faced "inappropriate political pressure or intimidation" before the vote.

"We're going to do a preliminary inquiry on the issue," said Rich Delmar, a spokesman for the inspector general's office.

Roseboro, representing the Treasury on a three-member government board, last week opposed the loan guarantee for the world's second-largest airline, only to have his department say separately that it was willing to reconsider a revised application. United trimmed its aid request to $1.1 billion on Tuesday.

Chicago-based United said in a Bankruptcy Court filing Thursday that it posted a net loss of $93 million in May -- its efforts to return to profitability complicated by near-record jet fuel costs.

The carrier, which is seeking an additional $500 million in financing after trimming its request for federal assistance, pointed to a $9-million operating profit for the month as evidence that its restructuring work was paying off.

"Our cost-reduction and revenue-generation efforts are delivering results and making United a stronger, more competitive airline as we continue to move forward," Chief Financial Officer Jake Brace said.

But Chief Executive Glenn Tilton cautioned employees in a separate message that more cuts would be needed to cope with increased competitive pressures and soaring fuel expenditures.

Tilton confirmed that the company asked the Air Transportation Stabilization Board on Tuesday to guarantee $1.1 billion of its $2 billion in conditional bank loans -- down from $1.6 billion previously and $1.8 billion in 2002.

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Associated Press and Bloomberg News were used in compiling this report.

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