This article from NYTimes.com has been sent to you by psa188@juno.com. Many in Washington Are Waiting for United's Next Move December 6, 2002 By EDMUND L. ANDREWS WASHINGTON, Dec. 5 - President Bush expressed "respect" today for the decision by a federal panel not to bail out United Airlines as even the airline's strongest supporters in Congress said there was little they could do to keep it from filing for bankruptcy protection from creditors. But the next round of political warfare over United, the nation's second-largest airline, is certain to begin almost immediately. As the airline's disappointed executives began preparations for a bankruptcy filing, probably by Monday, Republican and Democratic lawmakers said that efforts to overturn the Air Transportation Stabilization Board's decision were unlikely to succeed. The real battle will probably be fought over United's next move, because the board - after refusing on Wednesday to issue a $1.8 billion loan guarantee - also invited the airline to revise its current business plan. The question now is how United will respond, and whether the board will accept anything less than a drastic overhaul. "The board was pretty firm," said Senator Richard J. Durbin, a Democrat from United's home state of Illinois, who telephoned officials of the board and signed a letter supporting the airline. The decision, he said, "leaves United where I personally think bankruptcy is practically inevitable." In its decision, the transportation board dismissed United's business plan as "fundamentally unsound," and insisted on more drastic cost-cutting and a much broader revision of strategy than United had proposed with its plan, which was intended to save $5.2 billion. It hinted that the company would probably be better off requesting the loan guarantee as part of a future plan to emerge from bankruptcy. But the board did not provide any hard numerical criteria for a better plan, so it could still decide that fairly cosmetic changes to the current plan would resolve the problems. It will also be under even more pressure than before from Congress, as top aides to House Speaker J. Dennis Hastert, a Republican from Illinois, made clear today. "The A.T.S.B. was created just for cases like United's," said Peter Jeffries, a spokesman for Mr. Hastert. "This was a perfect example of a case where the A.T.S.B. should have stepped in and provided a loan guarantee. The fact that they chose not to do so is very disconcerting." President Bush's spokesman, Ari Fleischer, signaled today that the White House does not want to interfere. But his support for the board was less than effusive. "The president respects the board's decision," Mr. Fleischer said. "The decision was made on the merits by the board based on the extensive financial information available to them and based on the criteria that were established in the law." United's Republican and Democratic supporters in Congress expressed anger and disappointment at the board's decision. Some asserted that the board had not followed Congress's intention when it created the board after the Sept. 11 attacks. "Congress is the entity that set aside $10 billion for this purpose, and the Stabilization Board has not looked at this problem from the proper perspective," said Representative William Lipinsky, an Illinois Democrat whose district is near United's headquarters, which is close to O'Hare Airport in Chicago. He is also the senior Democrat on the House Transportation Committee. Mr. Lipinsky said United's supporters were discussing several options, including having Congress try to overrule the board's decision. United's labor unions began circulating ideas to that effect today. But other lawmakers said they had little choice but to wait for United to come up with a new plan. "When you create a professional organization, you have got to respect their decisions unless there has been some impropriety - and I don't think there has been any of that here," said Representative Philip Crane, an Illinois Republican who also pushed for the loan guarantee. One senior Republican official who supported United's rescue proposal noted that Congress would have very little time to pass legislation before United would have to file for bankruptcy protection. The stabilization board, which was created shortly after the terrorist attacks on Sept. 11, 2001, is a tiny and reclusive office that is supposed to provide loan guarantees to distressed airlines. But even before its decision on United, the board's top priority has been determining whether an airline will be able to repay the loan. It has rejected five requests for aid from smaller regional airlines, usually on the ground that the airline's prospects were too chancy. "They pushed us hard," said C. A. Howlett, the chief spokesman for America West, an airline based in Phoenix that received a $380 million loan guarantee one year ago. "The majority of the discussions were about the ability to repay." In July, the board gave conditional approval for a $1.8 billion loan guarantee to US Airways - but only after ordering the airline to revise its proposal substantially. US Airways filed for bankruptcy protection a month later. Last month, in what should have been a clear warning to United, the board demanded that the airline provide more data on a host of assertions: the basis for its rosy revenue projections; the speed of its cost-cutting; the extent of its pension liabilities; and the need for additional investment. The board's bluntness startled many industry executives, but it reflected the mindset of the investment bankers who form its core staff."Their top priority has been on the ability to repay - that has been the overriding theme," said John Heimlich, an economist at the Air Transport Association. http://www.nytimes.com/2002/12/06/business/06POLI.html?ex=1040189540&ei=1&en=bdf9ea9c027c9817 HOW TO ADVERTISE --------------------------------- For information on advertising in e-mail newsletters or other creative advertising opportunities with The New York Times on the Web, please contact onlinesales@nytimes.com or visit our online media kit at http://www.nytimes.com/adinfo For general information about NYTimes.com, write to help@nytimes.com. Copyright 2002 The New York Times Company