Uniteds competitors lobbying against the loan.

Executives at other airlines savored the federal government’s rejection of United Airlines’ request for a loan guarantee last night, after some of them had lobbied intensely against any bailout.

“At the end of the day, it’s good for our industry, and it’s good for the American people,” Gordon M. Bethune, chief executive of Continental Airlines, said last night, talking about the rejection of the loan application.

United’s competitors are likely to steal some of the airline’s passengers as it struggles to restore its finances and suffers through the distraction and publicity of a probable bankruptcy filing, industry analysts said. American Airlines, United’s main rival in Chicago and one of its chief competitors in California, stands to benefit the most, analysts said.

But the biggest prize would be United’s rights to fly overseas routes, which a judge could order the company to sell if it files for bankruptcy protection. The jewel in United’s system is its extensive schedule of flights across the Pacific to Asia, much of it acquired in 1985 when United bought the rights to fly those routes from a struggling Pan American World Airways.

Over the last week, United’s rivals sent their own financial analyses of the airline’s condition to the Air Transportation Stabilization Board, the federal body created after the Sept. 11 attacks to help the industry. The executives argued that United’s business was broken and that the $1.8 billion in loan guarantees it sought would end up being wasted, ultimately to be paid by taxpayers.

Douglas M. Steenland, the president of Northwest Airlines, praised the board for doing “an incredible amount of work” and called its decision “the right one.”

In the coming months, the loan rejection and even a bankruptcy filing are likely to lead to some cutbacks in service at United, which is based outside of Chicago and has a major hub at O’Hare International Airport there, but travelers should expect the airline to maintain most of its routes, travel agents said. US Airways is already in bankruptcy protection, and Continental emerged from earlier bankruptcies to become one of the industry’s stronger carriers, the agents said.

“In the near term, it will mean nothing for travelers,” said Hal F. Rosenbluth, the chairman of Rosenbluth International, a large travel agency based in Philadelphia. “The stigma of an airline bankruptcy has, for all intents and purposes, lost its negativity over the years.”

Industry executives said they had expected the government board to reject United’s request and were surprised only by its timing. Others noted that the letter from the board to Frederic Brace, United’s chief financial officer, was both detailed and blunt in its criticism of the company’s business plan.

Many analysts had expected the board to delay its decision until United’s mechanics had voted on concessions that they rejected earlier. That vote, which was scheduled for today, was called off last night.

“I was a little surprised they didn’t wait,” said C. Thomas Nulty, president of Navigant International, a travel agency based in Denver. “But I guess they decided that even if it went United’s way it wouldn’t have made a difference.”

United executives, while vowing to do everything they can to avoid bankruptcy, say that their rivals opposed the loan guarantee primarily so that they could benefit from the company’s troubles. Last night, the company’s supporters expressed disappointment with the decision.

J. Dennis Hastert, the Republican from Illinois who is speaker of the House, “thought United presented a fair and balanced proposal to the board,” according to Peter M. Jeffries, a spokesman.

As the nation’s second-biggest airline, after American, United is “too important to the traveling public” to be put at risk when the economy is weak and the holiday travel season is coming, Mr. Jeffries added.

Aside from incremental gains in market share, other airlines might most benefit from United’s woes by buying some of its international routes. Airlines approved by safety regulators have free rein to fly within the United States, except at a few crowded airports, but international flights are restricted by trade agreements.

United has a relatively large number of flights to Asia and Latin America and a good number of flights to Europe as well.

Both American and Delta Air Lines have tried in recent years to win new rights to fly to Asia and would probably be among the most eager bidders if United is forced to sell its Pacific route system.

“That asset has great value,” Mr. Nulty said, “and I know United is worried creditors will view that as a way to get some of their money back.”

——————

Seems to me like the vultures are circling the struggling animal already. And picking on it to kill it off completely. 🙁

What annoyes me here, is that these corporate asshats seems to have no regard for human life. Ok, so it’s business, but United have around 90000 employees, and in addition they generate thousands and thousands of other jobs around the world.

I might be naive, but i just dont see how it will help American economy to throw what must be, in total, way over 100.000 people into the unemployment lines. Maybe they could be a bit more honest and say, “hey, by sacrificing all those people and families, we will save our own asses!”…

Ok, rant off! 🙂