What comes after three strikes?
What does United Airlines do now that the US Air Transportation Stabilization Board (ATSB) has shut the door on any loan guarantee?
The ATSB not only rejected the airlines’ latest $1.1 billion federal loan guarantee, but also said it would not accept any further submissions.
United isn’t discussing specifics of its options publicly. But even before the Air Transportation Stabilization Board dismissed its latest loan-guarantee effort, CEO Glenn Tilton cautioned employees last week that more cuts would be needed to cope with increased competitive pressures and high fuel costs, according to the Associated Press (AP).
One area likely to be targeted for cuts by management is employee pensions, particularly since United must make at least $4 billion in pension payments through 2008.
The AP also said speculation on cuts also extends to United’s Asia routes and the size of its work force, which already is down to 62,500 from 100,000 before the 2001 terror attacks.
The ATSB has now rejected United’s request for a loan three times.
But the airline’s progress in overhauling its costs and operations since 2002 has won praise from the board and others. That raises the possibility of investment groups coming forward to invest the hundreds of billions necessary for the airline’s future survival.
United in a statement said the message from the ATSB was that “we can get the exit financing we need on our own.”
Lenders have continued to be “tremendously supportive” the airline said in the statement.
Report by David Wilkening
David
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