Vanguard Airlines turned down for aid loan

By Vincent Del Giudice
Bloomberg News Service

WASHINGTON — Vanguard Airlines Inc.'s request for a $13.5 million federal loan guarantee was rejected by the U.S. Air Transportation Stabilization Board.

The airline "did not provide a reasonable assurance that Vanguard will be able to repay the loan," the U.S. Treasury said in a statement. The board, set up as part of aid to U.S. airlines after the Sept. 11 attacks, is part of the Treasury Department.

Vanguard, which offers service to 18 U.S. cities, wanted to use the guarantee to get $15 million in financing. The Kansas City, Mo.-based company plans to file a revised application, company spokesman Alan Carr said.

"We plan to work with the board to address its concerns," Carr said. Vanguard shares were unchanged at 49 cents in over-the-counter trading and have dropped 59 percent in a year.

America West Holdings Corp. is the only airline company that has received a guarantee under the program. The parent of America West Airlines, the No. 8 U.S. carrier, received $429 million in financing in January after the government said it would guarantee $380 million of the amount. The company had to revise its request to meet the board's requirements.

US Airways Group Inc. has said it may file for bankruptcy protection should it fail to win a federal loan guarantee; UAL Corp.'s United Airlines, the world's second-largest carrier, has said it may seek a guarantee by the June 28 application deadline. Aloha Airlines also has said it plans to seek a guarantee by the deadline.