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Struggling America West secures loan guarantees

PHOENIX, Arizona (CNN) -- America West Airlines, floundering financially in the wake of the September 11 terrorist attacks, has received conditional approval for $380 million in federal loan guarantees.

The Air Transportation Stabilization Board announced the approval Friday.

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"On behalf of the 13,000 employees at America West and our millions of customers, we commend the Stabilization Board for its actions and for its recognition that America West is important to the efficiency and viability of the U.S. airline industry," said W. Douglas Parker, chairman, president and chief executive officer.

The loan guarantees mean that if America West defaults on $445 million in negotiated loans, the government will repay up to $380 million.

America West suppliers and creditors made more than $600 million in concessions to secure government approval for the loan guarantees.

The loan guarantees are part of the $10 billion fund signed into law by President Bush on September 22. The Air Transportation Safety and System Stabilization Act is designed to compensate airlines for losses incurred as a result of the terrorist attacks.

America West must increase the amount of compensation the government will receive and control growth in labor costs before the loan guarantees are finally approved.

Parker said he expected all the conditions to be met in the next two weeks.

"With the approval of the loan guarantees, competition is preserved and the viability of America West is assured well into the future," Parker said.