Less than a week after being rejected for a $1.6 billion loan guarantee by the federal government, UAL Corp.'s United Airlines yesterday resubmitted a modified application that reduces the amount it is seeking by $500 million, sources familiar with the application said.
The new application reduces the exposure of the federal government but also requires the airline to make up the difference elsewhere. United has not said where the money would come from.
To secure the additional funding, the airline may have to obtain additional concessions from employees, many of whom have already given up $2.5 billion in wages and benefits.
The application is United's third request for help from the Air Transportation Stabilization Board. The federal board rejected the Elk Grove, Ill.-based airline's first application in December 2002 when it sought $1.8 billion. Days later, United sought bankruptcy protection.
United spokeswoman Jean Medina declined to comment on the specifics of the new application. "We've enhanced it," she said. Medina said the airline expects the ATSB to decide "in a matter of days, not weeks."
ATSB Chairman Edward M. Gramlich, a Federal Reserve governor, voted against United's application. Brian C. Roseboro, Treasury undersecretary for domestic finance, also voted against the application, but the Treasury Department said it would reconsider if the airline submitted a new application with updated information. Jeffrey N. Shane, the Transportation Department's undersecretary for policy, also voted to defer the decision for a week pending further information.
United's application has sparked a political battle as several members of Congress lobbied aggressively for and against the airline's application. Yesterday, Sen. Peter Fitzgerald (R-Ill.) sent a letter to Dennis S. Schindel, acting inspector general of the U.S. Treasury, requesting that Schindel investigate "whether any inappropriate political pressure or intimidation has been or is being applied to Mr. Roseboro to change his vote."