National lowers amount of federal loan request

Friday, May 17, 2002 | 10:54 a.m.

National Airlines has filed for a federal loan guarantee of $60 million with the Air Transportation Stabilization Board, $10 million less than the company had announced it would seek.

Mike Conway, chief executive officer of the Las Vegas-based airline, said a combination of factors has improved the company's financial condition enough to request a smaller guarantee of the loan commitment the airline has secured with Foothill Capital Corp., a subsidiary of Wells Fargo Bank.

Conway appeared before the ATSB in Washington Wednesday and discussed his company's request in a meeting Thursday with the Las Vegas Sun editorial board.

Conway said National, which is operating under Chapter 11 bankruptcy protection, intends to repay the loan in five years instead of the maximum term of seven years.

Under the airline's expansion plan, National would add to its fleet and develop new routes. Conway said the increased volume would enable the company to pay back the loan in less than the maximum time allowed.

National already has locked in $33 million in contract concessions from suppliers -- most of that from aircraft lessors -- and has converted $80 million in debt to equity as part of a bankruptcy reorganization plan.

The plan has been conditionally approved by U.S. Bankruptcy Court Judge Linda Riegle and would take effect as soon as the loan guarantee is approved.

National also received a $9.5 million from an investor and within weeks will get its final $3.3 million grant payment from the federal government as part of a $5 billion aviation industry bailout. National already has received about $18 million in bailout grant money.

National expects to get a response from the ATSB on its loan guarantee request within weeks.