This article from NYTimes.com has been sent to you by psa188@xxxxxxxxx /-------------------- advertisement -----------------------\ THE DREAMERS - NOW PLAYING Set against the turbulent political backdrop of 1968 France when the voice of youth was reverberating around Europe, THE DREAMERS is a story of self-discovery as three students test each other to see just how far they will go. THE DREAMERS is released uncut with an NC-17 rating. Watch The Dreamers trailer at: http://www.thedreamers.com \----------------------------------------------------------/ Small Airlines Oppose Plan for U.S. Aid to United March 2, 2004 By MICHELINE MAYNARD Alarmed at United Airlines' attempt to enter the low-fare market, an organization representing low-fare airlines said yesterday that it planned to fight United's effort to win $1.6 billion in federal loan guarantees, which would be the centerpiece of its restructuring plan. Their vow is the first sign of public opposition within the industry to the revised bid by United, which filed for bankruptcy protection in December 2002, only days after its first application for a loan guarantee worth $1.8 billion was turned down. United, a unit of the UAL Corporation, is the nation's second-largest airline behind American, a unit of the AMR Corporation. United wants to emerge from bankruptcy by the end of June. It has arranged $2 billion in exit financing, most of it contingent on the federal guarantee. The loan board does not face any deadline for deciding on United's application. Low-fare carriers contend that a federal loan guarantee would give United unfair ammunition against its competitors, said Edward P. Faberman, executive director of the Air Carrier Association of America, a lobbying group whose members include JetBlue Airways, America West Airlines, AirTran Airways, Frontier Airlines and Spirit Airlines. In particular, Mr. Faberman said those airlines were upset by the recent start of Ted, United's own low-fare carrier, which began service last month from its Denver hub to cities in the West and Florida. Next month, United plans to add Ted fights from Dulles International Airport outside Washington, and it expects to begin service later this year from its main base in Chicago. Mr. Faberman said the airlines' chief executives would decide in the next few days whether to fight United individually or act collectively under the lobbying group's umbrella. In either case, he said, "We will oppose it." A spokeswoman for United, Jean Medina, said the airline was "flattered that these competitors consider us a competitive threat." Yesterday, the airline group also said it opposed measures recently passed by Congress that would allow a group of major airlines, including United, to stretch out delinquent pension obligations over the next few years. In a letter to the Bush administration, the chief executives of the five airlines called the measure "selective subsidization." The executives - David G. Neeleman of JetBlue, Joseph B. Leonard of AirTran, W. Douglas Parker of AmericaWest, Jeff S. Potter of Frontier and Jacob M. Schorr of Spirit - said pension relief should benefit the entire industry, "not be targeted to help a few airlines." The letter was reported by Time magazine in this week's issue. United has said it cannot afford to emerge from bankruptcy without some form of pension relief. It also has applied for waivers from the Internal Revenue Service allowing it to stretch out the payments. But Mr. Faberman said both the proposed loan guarantee package and the pension bill struck the low-fare airlines as unjustified. "When it comes down to it, this is a highly competitive industry," Mr. Faberman said. "And the government shouldn't be forwarding money under one pretense to one group of carriers so they can continue their quest against the others." United originally applied for loan guarantees from the federal Air Transportation Stabilization Board in June 2002. The board was formed after the September 2001 attacks to oversee $10 billion in assistance earmarked by Congress to help the struggling industry. United's first application was heatedly opposed by several major airlines, including Continental and Northwest, which contended United had not cut costs deep enough to warrant federal help and that its business plan was too optimistic. Both were reasons cited by the loan board in turning down the initial request. The board also questioned whether United had a strategy to combat low-fare airlines, precisely what the carrier has done by creating Ted, Ms. Medina said. In fact, low-fare airlines did not oppose United's initial application, Mr. Faberman said. For one thing, United's original bid came little more than a year after the attacks, and emotions within the carriers were still raw, he said. For another, AmericaWest and Frontier had been granted loan guarantees, while Spirit's application was rejected, and the carriers felt they did not want to become involved in matters before the board, he added. JetBlue and AirTran did not seek federal assistance. But United's revised application came at the close of a year when low-fare airlines had carried nearly one-quarter of all domestic passengers. Further, the companies have begun aggressive expansion plans, particularly JetBlue, which has ordered 100 new regional jets with options on 100 more planes. At the same time, all of the carriers are faced with potential pressure from Ted, which shares a home base at Denver with Frontier, and in fact will compete for customers with all the low-fare carriers in at least one market where it flies or plans to fly. In a reversal, major airlines have kept quiet this time about United's application, which has the support of House Speaker J. Dennis Hastert, a Republican from Illinois. Notably, Southwest Airlines, the largest low-fare carrier, said it would not become involved. It does not participate in the lobbying group, nor did it oppose United's original bid. "We are not a participant in that fight," Southwest's chief executive, James Parker, said in an interview yesterday. http://www.nytimes.com/2004/03/02/business/02fly.html?ex=1079237966&ei=1&en=0a9e5b631b44ad31 --------------------------------- Get Home Delivery of The New York Times Newspaper. Imagine reading The New York Times any time & anywhere you like! Leisurely catch up on events & expand your horizons. Enjoy now for 50% off Home Delivery! 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