U.S. Treasury reportedly probes airlines

/ Source: The Associated Press

Three U.S. airlines confirmed Monday that they have received government subpoenas that reportedly are part of a U.S. Treasury Department investigation into the board that provides federal loan guarantees to domestic carriers.

Spokesmen for US Airways, United Airlines and America West say they had received subpoenas and are cooperating fully, but they declined to elaborate.

According to reports that first appeared in The New York Times on Saturday, Treasury Department investigators have asked several major airlines to turn over records of their dealings with the Air Transportation Stabilization Board in 2002 and 2003.

Treasury Department officials declined to discuss the issue Monday.

"It is our policy neither to confirm nor deny the existence of particular investigations while they are under way," said Richard Delmar, counsel to the department's Office of Inspector General.

The Times report said investigators are seeking records of airlines' dealings with Daniel G. Montgomery, a former executive director of the board, along with other staff members, board members and relatives. Montgomery held the post for 16 months before resigning in August 2003 to take a job with Kroll Zolfo Cooper LLC, a financial consulting firm.

Montgomery did not return a telephone call seeking comment.

The ATSB was created by Congress to oversee a $10 billion loan program to help out the airline industry, which was dealt a sharp blow by the Sept. 11, 2001, terror attacks.

The biggest loan guarantee thus far — $900 million — went to US Airways. Others including America West and Frontier Airlines also have received federal loan guarantees.

A second request for a loan guarantee from United Airlines is pending.