No doubt the airline business has been tough lately. Rising fuel prices have threatened to take a bite out of profits. And the CEO of long-troubled Delta Air Lines (NYSE: DAL) this week reported that bankruptcy was still an option for the company. In the wake of such news, United's predicament is hardly surprising.
Interestingly, United spun news of the rejection as good, citing the government's claim that United doesn't need its backing. The company appears to have seen this coming, for a week ago CEO Glenn Tilton said United would exit bankruptcy with or without federal loan assurances. (Fool Salim Haji today said the government's rejection will be beneficial to the industry, as it will help even the playing field for the low-cost carriers.)
It won't be easy either way. According to a report in the Chicago Tribune, United needs $2 billion to repay loans it received to ride out bankruptcy. Citigroup (NYSE: C) and JP Morgan Chase (NYSE: JPM) had agreed to provide much of the funding, figuring federal backing was likely. Now, without it, United could be forced to sell a hefty ownership stake and get more sacrifices from employees to earn the moola needed.
Remember your bag tags from the late 80s? "One Less Airline Can Make A Difference"
Interestingly, United spun news of the rejection as good, citing the government's claim that United doesn't need its backing. The company appears to have seen this coming, for a week ago CEO Glenn Tilton said United would exit bankruptcy with or without federal loan assurances. (Fool Salim Haji today said the government's rejection will be beneficial to the industry, as it will help even the playing field for the low-cost carriers.)
It won't be easy either way. According to a report in the Chicago Tribune, United needs $2 billion to repay loans it received to ride out bankruptcy. Citigroup (NYSE: C) and JP Morgan Chase (NYSE: JPM) had agreed to provide much of the funding, figuring federal backing was likely. Now, without it, United could be forced to sell a hefty ownership stake and get more sacrifices from employees to earn the moola needed.
Remember your bag tags from the late 80s? "One Less Airline Can Make A Difference"