Hesitant to “look a gift horse in the mouth,” Regional Airline Association president Debby McElroy applauded the Office of Management and Budget’s decision to allow bankrupt carriers, including RAA members Midway Airlines and Shuttle America, access to part of the $10 billion in loan guarantees signed into law as part of the Air Transportation Safety and System Stabilization Act. However, she stopped short of issuing a full endorsement of the Bush Administration’s plan, particularly on issues regarding the term lengths of the guarantees and the risk-assessment method used by the FAA in its administration of low-cost liability insurance.
Although the final rule regarding the loans increased the term length of the guarantees from the originally proposed three years to seven years, aircraft financing plans typically extend to at least 10 years, leaving a significant period during which loans would remain unsecured by the government. “We were very pleased that the loan guarantees were available for all regional airlines, but we’re disappointed that the terms specified don’t allow for the easy use of this for financing new regional jets,” said McElroy.
