Feds Playing Hardball With Airline Loan Program

As the airline industry racks up billions of dollars in debt -- $1.4 billion in the second quarter alone -- many carriers sit on the brink of bankruptcy, forced to ask the government for assistance in order to stay in business.

A government rejection of an aid request spells trouble, as Vanguard Airlines (VGDA Quote), a Kansas City-based carrier flying jets to 17 cities, announced on Tuesday morning.

The company said it would file for Chapter 11 bankruptcy protection after the federal government's Air Transportation Stabilization Board rejected Vanguard's revised application for an $8 million loan guarantee. The news comes just six weeks after the ATSB rejected the company's first application for a $15 million loan guarantee. ...