Federal Board Denies United Airlines' Request for $1.6 Billion Loan Guarantee.

Byline: Greg Griffin

Jun. 18--The U.S. government rejected United Airlines' application for a $1.6 billion loan guarantee late Thursday but gave the company an opportunity to submit a modified bid within a few days.

The three-member Air Transportation Stabilization Board said it determined that the guarantee wasn't needed to maintain "a safe, efficient and viable commercial aviation system in the United States," one of its goals.

The panel also said that because private credit markets have improved and the bankrupt airline has become more competitive, "the likelihood of United succeeding without a loan guarantee is sufficiently high so as to make a loan guarantee unnecessary."

Still, the rejection was a stunning blow to the nation's No. 2 carrier and Denver International Airport's dominant airline, which has spent more than two years trying to secure the government backing.