ATSB Denies Funding For National, Spirit
The Air Transportation Stabilization Board yesterday denied applications for federal loan guarantees submitted by Las Vegas-based National Airlines and Ft. Lauderdale, Fla.-based Spirit Airlines.
In a letter yesterday to National president Michael Conway, ATSB executive director Daniel Montgomery wrote, "The board determined that National's proposal does not provide a reasonable assurance that National will be able to repay the loan. Notably, the Board concluded that National's proposed business plan poses an unacceptable risk to the Federal government." ATSB unanimously rejected National's application for $50.5 million in guarantees backing a $60 million loan.
"Don't count us out," Conway said in a statement this morning, adding that alternate plans are in the works. "I am absolutely appalled by the decision made by the ATSB. Not only did our application request that the government guarantee a smaller percentage of a loan than what other carriers have requested and received, but to my knowledge, National was the only airline to secure a significant amount of additional equity investment from the private sector. It has been apparent to us for some time that unless you're both big and in desperate straits, you're facing an uphill battle."
Montgomery sent a similar letter to Spirit CEO Jacob Schorr. ATSB denied Spirit's application for $54 million in guarantees backing a $60 million loan by a 2-1 vote. In a statement, Schorr responded to the decision, saying, "While we were disappointed in the ATSB's decision, we are very confident in the viability of our company and the business plan that we have developed to carry us forward."
ATSB already approved loan guaranteed for America West Airlines and conditionally for US Airways. Kansas City-based Vanguard Airlines was rejected in May and then again late last month. United Airlines yesterday acknowledged its initial loan guarantee application must be revised to win approval.
Despite the setback, both National and Spirit plan to maintain operations.