ATSB Turns Down UAL Request For Loan Guarantees... Again

Well, if this isn't a firm "no," we don't know what is.

The Air Transportation Stabilization Board Monday rejected United Airlines' latest request for more than $1 billion in loan guarantees. ATSB Executive Director Michael Kestenbaum said, "The board will not accept any further submissions from United with respect to the application."

The ATSB just said no after United went back a third time with an amended application for $1.1 billion -- about $500 million less than it originally asked for.

"(The) board concluded that granting the loan guarantee is not a necessary part of maintaining a safe, efficient, and viable commercial aviation system in the United States," said an ATSB letter sent to UAL, United's parent company. "Moreover, the Board believes that airline credit markets have been improving since late 2001 and 2002... increasing the likelihood of United succeeding without a loan guarantee."

United's response?

"While we disagree with their decision, we are gratified by the ATSB's public recognition of our progress and are already moving forward to secure the exit financing we need to take United out of bankruptcy," said a statement issued by the airline. "The message from the ATSB is that we can get the exit financing we need on our own."

The UAL statement continued: "We are now holding discussions with our lenders and others to determine what an appropriate overall capital structure might be. The discussions we are having will enable us to fill that out, so we can continue moving forward toward our exit from Chapter 11."

The question now, of course, is what net effect with the ATSB decision have on United's attempt to close the door on its Chapter 11 bankruptcy. That was supposed to happen by the end of this year. But on Wall Street, analysts now think it won't happen until next year -- at the earliest.

Even then, Standard & Poor airline credit analyst Phil Baggaley told CNN's Money Watch, "They will have to go back and negotiate with labor, with their creditors, and with the unsecured creditors. If they attract new equity investors, it will have to change (the) allocation of ownership each will have."

It's touch and go, said Baggaley. He's not at sure that UAL can stave off liquidation.

"I think United's chances of raising equity and credit will depend largely on external events outside their control," he said. "If there are no major terrorist attacks that affect aviation, or if fuel doesn't stay extremely high, they probably will be able to pull together exit financing. But there are risks from those external factors. I think the clock is ticking."

FMI: www.ual.com