U.S. board rejects Vanguard loan guarantee request

Wednesday, May 29, 2002 | 10:53 a.m.

SUN STAFF AND WIRE REPORTS

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

The Kansas City, Mo.-based 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.

The loan guarantee request is similar to Las Vegas-based National Airlines' $60 million loan guarantee application filed earlier this month. A National spokesman said because each airline's application is different and based on its own merits, National doesn't see the ATSB's rejection of Vanguard's application as a bad sign.

"I don't believe that that (Vanguard's application) has any bearing on us whatsoever," said Dik Shimizu of National.

National and Vanguard are two of the six airlines that have filed for loan guarantees through the ATSB.

Other airlines that have filed include Frontier Flying Services Inc., Evergreen International Airlines Inc., and Sprit Airlines, which recently announced plans to serve Las Vegas.

America West Holdings Corp. is the only airline company that has filed and 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 and UAL Corp.'s United Airlines, the world's second-largest carrier, has said it may seek a guarantee by the June 28 application deadline. The ATSB has yet to formally acknowledge a US Airways application.

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

"We plan to work with the board to address its concerns," Carr said.