S&P: UAL submits amendment

Standard & Poor's said UAL Corp. unit United Air Lines Inc. (both rated D) is reported to have submitted an amendment to its application for a federal loan guarantee.

S&P said the company has acknowledged only providing more information to the Air Transportation Stabilization Board. Media reports describe a reduced loan guarantee request, $1.1 billion instead of the previous $1.6 billion, with the $500 million reduction to be replaced by other sources of capital, such as equity and/or unsecured debt.

If the reports are accurate, it is not clear how the revised bid would address one of the grounds on which the Air Transportation Stabilization Board rejected United's previous application - that United could access capital markets on its own, without government assistance, according to S&P.

The revised application would seem to confirm the board's objection. However, proposing a reduced federal loan guarantee and therefore a reduced total secured loan facility would improve collateral coverage for the secured facility, since the same amount of collateral would be available for a smaller facility.

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