This article from NYTimes.com has been sent to you by psa188@juno.com. US Airways Loan Guarantee Is Reaffirmed February 12, 2003 By DANIEL ALTMAN The federal government renewed its approval of a $900 million loan guarantee for US Airways yesterday, moving the airline a step closer to exiting bankruptcy. The Air Transportation Stabilization Board agreed in July to the guarantee, which would back a proposed $1 billion loan, but US Airways, the nation's seventh-biggest airline, prompted a further review of its application when it filed for bankruptcy protection in August. "We are gratified by the A.T.S.B.'s action today and its vote of confidence in our company's restructuring and prospects for long-term success," David N. Siegel, the airline's president and chief executive, said in a statement on the US Airways Web site. The company declined to comment further. The latest approval, like the first one, hinges on several conditions. US Airways must emerge from bankruptcy by March 31, after which it will be able to borrow the $1 billion. The company has not specified which lenders would provide the money. The conditions also include formal agreement on concessions from the airline's employees and obtaining approval from the Pension Benefit Guaranty Corporation, a federal agency, for a strategy for funding pensions. The bankruptcy court will review that strategy later this month. The decision by the transportation board came two months after it rejected a similar request from UAL, the parent company of United Airlines, which sought a $1.8 billion guarantee. Less than a week after the board rejected the request, UAL filed for bankruptcy protection. The board's preference for one airline over another puzzled some experts. "You can point to some small differences between them, but it's very hard to understand why you do one and not the other," said Roger G. Noll, a professor of economics at Stanford University who follows airlines. Yet some differences were important to the board, said Harvey R. Miller, a longtime bankruptcy lawyer who is now a managing director at Greenhill & Company, an investment firm in New York. "US Airways had much more productive spadework prebankruptcy and also has done probably a more radical restructuring in terms of reducing its fleet size and contracting its fleet operations," he said. "In the case of United, the A.T.S.B. basically said that the business plan was not credible." Mr. Miller also gave credit to David G. Bronner, the chief executive of Alabama's state pension system, which has provided financing for US Airways during its bankruptcy. Mr. Bronner's hardball tactics, Mr. Miller said, forced the company and its employees to make sacrifices. "Sometimes it's good to have a bad guy," he said. The board's decision had its odd aspects, because UAL had once planned to buy US Airways. The merger was proposed before the terrorist attacks, when UAL was in a much stronger financial position. It collapsed in July 2001 after the Justice Department objected on grounds that competition for passengers would suffer. "US Airways was in trouble before United was," Professor Noll said. "Its financial problems were deeper and predated 9/11. Its sale to United was a semibankruptcy fire sale. It was not regarded as a viable carrier prior to 9/11." Last week, US Airways reported a loss of $794 million for the fourth quarter of 2002, a moderate improvement on its shortfall of $1.16 billion in the period a year earlier. http://www.nytimes.com/2003/02/12/business/12AIR.html?ex=1046058683&ei=1&en=08dd2939297c7feb 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