=20 ---------------------------------------------------------------------- This article was sent to you by someone who found it on SFGate. The original article can be found on SFGate.com here: http://www.sfgate.com/cgi-bin/article.cgi?file=3D/news/archive/2004/06/21/f= inancial1755EDT0282.DTL --------------------------------------------------------------------- Monday, June 21, 2004 (AP) Airline reworks aid bid as politics swirl DAVE CARPENTER, AP Business Writer (06-21) 14:55 PDT CHICAGO (AP) -- United Airlines was retooling its application for a federal loan guarant= ee Monday as top Illinois politicians lobbied on both sides of the issue. The Air Transportation Stabilization Board last week turned down United's request to guarantee $1.6 billion of its $2 billion in pending private loans, but two of the three agencies involved with the panel signaled a willingness to look at revisions to the application. United spokeswoman Jean Medina said the Chicago-based airline would not comment on specifics of its changes or when they would be submitted. "All I can say is we're continuing with the process," she said. "This is something we'll work directly with the ATSB on." The Wall Street Journal, citing unidentified sources, reported that Unit= ed would inform the federal board as soon as Monday of a plan to find about $500 million in new equity, which would reduce the size of the federal guarantee. But unless the board reverses course, United will have to seek investors who are willing to sink far more than that into the airline, which hasn't turned a profit in four years. That is a last-resort option for United, since such an investment group is almost certain to demand further cost cuts, perhaps targeting employee pension plans or even some of its routes. House Speaker Dennis Hastert, R-Ill., lobbied on behalf of United at a Chicago news conference, saying the airline is in need of the assistance the industry became eligible for in legislation passed after the 2001 terrorist attacks. Granting the loan guarantee to the carrier, he said, is "the right thing to do." Congressional sources said Hastert talked with Treasury Secretary John Snow last week after the Stabilization Board had made its decision but before it was made public. These sources, who spoke on condition of anonymity, said an annoyed Hastert told Snow that United had not completed its final proposal when the board issued its rejection. Subsequently, the Treasury Department issued a statement saying it was prepared to reconsider its position on the loan guarantee. The Transportation Department issued a similar statement. Hastert's spokesman, John Feehery, said, "The speaker believes that Unit= ed deserves a chance to offer its enhanced package and is asking that they will get that chance." U.S. Sen. Peter Fitzgerald, who believes the subsidy is unnecessary, voiced concern about the behind-the-scenes politicking for United. The lame-duck Illinois Republican said it was a bad sign that the Treasury Department said it would reconsider the request. "It seems to me the board members based their decision on federal statutes, the facts and their own consciences," he said. "It concerns me there are efforts being made to get them to switch their votes." He said there were rumors floating around in Washington that a member of the board is being pressured to resign so that a person favoring the loan guarantee can be appointed. A story in the New York Times on Monday focused such speculation on Brian Roseboro, Treasury's representative. Treasury Department spokesman Rob Nichols said there weren't any efforts afoot within the Bush administration to replace Roseboro. Nichols also said there was no hard deadline by which United would need = to file another application -- an action United indicated last Thursday it would take within "days, not weeks." "Should there be another application, it would simply be reviewed on its merits," Nichols said. Associated Press writers David Espo and Jeannine Aversa in Washington and Herbert G. McCann and Maura Kelly in Chicago contributed to this report. ---------------------------------------------------------------------- Copyright 2004 AP