ATA loan request tentatively OK'd

By John Hughes
Bloomberg News Service

WASHINGTON — ATA Holdings Corp.'s American Trans Air won tentative approval for a $148.5 million loan guarantee, becoming the third carrier to at least get a preliminary award from a U.S. board set up to distribute aid after the terrorist attacks.

The unanimous approval is subject to several conditions, including additional fees, warrants and dividend restrictions, the Air Transportation Stabilization Board said in a letter to the Indianapolis-based carrier.

"The board has determined that the applicant has demonstrated a reasonable assurance that it will be able to repay the loan according to its terms," the letter said.

In Hawai'i, Aloha Airlines is waiting for a decision from the board on its application for a five-year, $45 million loan — $40.5 million of which would be guaranteed. Hawaiian Airlines did not apply for a loan.

ATA, the 10th largest U.S. airline, applied for the guarantee in June to help secure $165 million in financing. The company said it needed the guarantee because of limited access to credit and capital markets as it tried to recover from lower air-travel demand after the Sept. 11 terrorism.

ATA Holdings spokeswoman Angela Thomas said the company will not comment until it reviews the board's decision. ATA's shares fell 32 cents to $3.06 at 4 p.m. in Nasdaq Stock Market trading and have fallen 79.5 percent this year.

Sixteen U.S. passenger and cargo airlines applied for more than $3.7 billion in guarantees. Congress and President Bush established the $10 billion guarantee fund 11 days after the attacks to help airlines avoid bankruptcy and recover from related losses.

The board has approved one application, a $380 million guarantee for Phoenix-based America West Holdings Corp. in January. It tentatively approved a $900 million guarantee for US Airways Group Inc. in July. The board rejected four carriers' applications and is considering nine others, including a request by UAL Corp.'s United Airlines for $1.8 billion.

The board last month voted against loan requests from Las Vegas-based National Airlines Inc. and Fort Lauderdale, Fla.- based Spirit Airlines Inc. The loan board twice denied guarantee requests by Kansas City-based Vanguard Airlines Inc. and rejected an application by Frontier Flying Service Inc., a small commuter carrier in Alaska.