America West Airlines has revised its $445 million US government loan application to include a significant equity stake in the carrier.
The first airline to seek federal loan guarantees after the 11 September terrorist attacks, America West has offered the government 10% of its Class B stock, in a bid to make the loan application more appealing to government regulators, according to chief executive Douglas Parker.
After talks with the Airline Stabilisation Board, Parker said he was confident that the equity stake combined with other financial concessions would facilitate the loan approval process.
Apart from the inclusion of equity, the airline offered a more conservative projection of its future financial performance, offered to pay higher fees to improve taxpayer returns and increased its own risk on the loan from $26 million to $45 million.
The company added that it does not expect to see profitability until 2003 at the earliest. This assumes that revenue rebounds 10.5% industry-wide in 2003 to a level slightly below that of 2000. America West expects to repay the loan from 2005 to 2008.
Discount carrier Vanguard Airlines joined in the pursuit of federal loan guarantee assistance last week. The Kansas City-based carrier has asked the government to back a $60 million loan it is seeking from Westdeutsche Landesbank Girozentrale.
Vanguard is undertaking a comprehensive restructuring package that hinges upon the government aid, chairman Scott Dickson said last week.
"We have made substantial progress in completing Vanguard's business turnaround with dramatically improved reliability and customer service, which has already resulted in significant year-over-year increases in load factor despite the economy and the aftermath of 11 September," Dickson said.
Despite its financial difficulties, Vanguard added service to Fort Lauderdale last week and plans to add Colorado Springs on 20 December.
Meanwhile, National Airlines says it also plans to seek federal loan guarantees. The bankrupt carrier says it will ask the government to guarantee a $45 million loan from one of its many creditors.
Source: Flight International
