Speaker Hastert is Lobbying Hard

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Aug 27, 2002
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Pressure mounts on board weighing United Air help
By John Crawley
WASHINGTON, Nov 26 (Reuters) - Senior members of Congress have boosted their lobbying on behalf of United Airlines as the Bush administration nears a decision on whether to give the carrier a loan guarantee to avoid bankruptcy.
Led by House of Representatives Speaker Dennis Hastert, most of the Illinois and Virginia congressional delegations have pressed senior White House, economic, and transportation officials to help the Chicago-based carrier with a $1.8 billion guarantee.
Hastert has spoken to President George W. Bush as well as lobbied Treasury Secretary Paul O''Neill and Federal Reserve Chairman Alan Greenspan about the No. 2 airline''s application, a top congressional aide said.
The Treasury, the Federal Reserve and the Transportation Department each have a vote on the three-member stabilization board, which was created by Congress to help airlines struggling financially after the Sept. 11, 2001, attacks.
The speaker is making the case clearly and concisely to influential leaders regarding the decision on the loan guarantee on United''s behalf, said Pete Jeffries, communications director for the Illinois Republican.
In those conversations, he continues to make the case why it is so important to keep United flying because of its impact on the traveling public and the nation''s economy, he said.
Most agree that a decision is imminent but board members have not signaled whether the bid will be approved. Over the summer, the stabilization board sought more cost savings and recently asked the company for more information about its recovery plan.
But the effort by United, a unit of UAL Corp. [UAL.N], in recent weeks to satisfy the government''s demands has impressed some administration officials.
I will say UAL has taken a lot of steps that some thought they couldn''t take, said a former government official with knowledge of the loan guarantee deliberations. There is a lot of political support for them going forward.
United has finalized its package of cost-cuts and has presented its financial recovery plan to the board. It also faces a key debt payment on Dec. 2. Failing to meet or renegotiate that would trigger a bankruptcy filing.
In a recent letter to Daniel Montgomery, the stabilization board''s executive director, Hastert and other lawmakers promoted United''s successful bid to wring more than $5 billion in concessions from its workers.
These unprecedented agreements, coupled with other painful cost cuts and profit measures, makes it clear that United will be a strong competitor and will be able to repay the loan, the letter said.
The stablization board has rejected some applications from other airlines over concerns they would not be able to pay back a loan that was backed by a government guarantee. United has asked the government to guarantee $2 billion in private financing.
Virginia''s two Republican senators, George Allen and John Warner, also wrote Bush last week in support of United, which operates a hub there at Dulles airport outside Washington.
Air carriers, including United, are reporting losses, terminating service and cutting jobs, they wrote.
The prospect of a potential war in the Middle East will have a further destablizing effect on this critical sector of our economy. By approving United''s application for a federal loan guarantee, the ATSB can help continue air service, Warner and Allen wrote in their letter that was also signed by several House members from Virginia.
While Congress presses the administration to approve the loan, some of United''s competitors are questioning whether the company''s financial recovery plan, which includes the loan guarantee, is enough to keep it going.
Transportation Secretary Norman Mineta has paid particularly close attention to the United case, weighing in on some crucial details of the carrier''s concession plans, administration sources said.
It''s more crucial because of the sheer size and logistical challenges that (United) poses, said one administration source. It''s taken an enormous amount of time (to review) because we want to make sure we get it right.

11/26/02 16:04 ET
 
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