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6/24/2004

United lowers sights

The Associated Press

CHICAGO ó United Airlines has filed a scaled-down request for government assistance in a last-ditch try to tap into a loan guarantee program created to help the airline industry after the 2001 terrorist attacks.

The No. 2 U.S. carrier filed changes to its application Tuesday that include reducing the amount of the federal loan guarantee it seeks to $1.1 billion from the previous $1.6 billion, a source familiar with the process said, speaking on condition of anonymity.

United, which says it needs $2 billion in loans in order to pay off its bankruptcy financing and emerge from Chapter 11, is counting on private equity to make up the $500 million it sliced from its proposal.

The nationís two largest banks, Citigroup and J.P. Morgan Chase, agreed last year to provide Unitedís exit loan package if the government would guarantee much of it. While neither United nor the two banks have divulged the new terms, the banksí willingness to put more of their own money at risk was necessary for the airline to submit its reduced request.

United spokeswoman Jean Medina declined to discuss the changes to the request on Wednesday and said the carrier doesnít know how long the Air Transportation Stabilization Board will take to rule on the modified request.

ATSB spokeswoman Anne Womack Kolton confirmed the new filing but did not provide details.

The revised application marks the third attempt by the airline to secure federal assistance dating to December 2002, the month it filed for bankruptcy.

The ATSB last Thursday rejected Unitedís request for a $1.6 billion guarantee, which was reduced from the $1.8 billion request it made in 2002. But two of three agencies involved with the panel signaled a willingness to consider revisions.