United doesn't get loan; machinists cancel vote By Marilyn Adams, USA TODAY United Airlines, once the world's largest, faces a likely bankruptcy filing in coming days because the federal government refused Wednesday to back an emergency loan.Hours later, United Airlines mechanics called off a vote planned for Thursday on wage cuts. The Machinists' union canceled the vote just hours before it was to begin. The Air Transportation Stabilization Board, established by Congress after the Sept. 11 attacks, voted 2-1 to deny United's application for a $1.8 billion loan guarantee. After $3 billion in losses since 2001, United is running low on cash and has been shut out by private lenders because of its weak condition. United CEO Glenn Tilton said the airline will consult its unions and business partners and "quickly determine what step to take next. Whatever course we chart, it should be emphatically clear that United will continue to fly and to deliver exceptional service." The airline has been preparing for a Chapter 11 bankruptcy protection filing that could come this weekend. Debts totaling about $900 million come due next week, and paying them would drain precious cash United needs to keep operating. Although United has said it will keep flying during a bankruptcy reorganization, more cost-cutting will be needed. It isn't known yet whether it will have to further cut its schedule in the next few weeks, affecting holiday flights that passengers booked in advance. The loan board left open a door to financial aid later. United can revise its application in or out of bankruptcy with new numbers and be reconsidered, board Executive Director Dan Montgomery said. The board's decision brought immediate criticism, even from some Republicans. A spokesman said a disappointed House Speaker Dennis Hastert, from United's home state of Illinois, "thought that the airline presented a strong, fair and very balanced proposal." Unions representing United's workers, who offered billions of dollars in contract concessions to help United qualify for the loan guarantee, were angry. The International Association of Machinists, which represents about 40,000 United workers, including mechanics, criticized the Bush administration. "This administration just let down the American worker," said Tom Buffenbarger, national president of the machinists union. "I think they have some serious explaining to do." Last week, the mechanics rejected a pay cuts package considered key to securing the loan guarantee. They canceled a vote scheduled for today on the concessions. But Montgomery said that even if mechanics approved the pay cuts, the federal board wasn't convinced United would be able to repay a $2 billion loan and avoid default. "There were fundamental deficiencies" in the application, Montgomery said. "The business plan was not financially sound," and the board had to protect taxpayers, he said. United's financial problems predate the Sept. 11 disaster, during which it lost two jets. It began posting losses in late 2000 after labor turmoil forced it to cancel thousands of flights that summer. Critics say that should make it ineligible for the loan guarantee, designed to help airlines hurt by the decline in air travel after the terrorist attacks. United argues that it deserves the government help because it suffered badly from the sharp travel falloff. Contributing: Barbara DeLollis and William M. Welch The owner of Roger's Trinbago Site: Roj (Roger James) *************************************************** escape email mailto:ejames@escape.ca Trinbago site: http://www.tntisland.com CBC Website http://www.tntisland.com/caribbeanbrassconnection/ The Trinbago Site of the Week: (Island Events) http://www.islandevents.com (Island Events) courtesy of Roj Trinbago Website & TnT Web Directory Roj's Trinbago Website: http://www.tntisland.com TnT Web Directory: http://search.co.tt *********************************************************