A government board created to help US airlines financially in the aftermath of the 2001 hijack attacks could pocket more than USD$300 million for taxpayers when its work ends this year.

The Air Transportation Stabilization Board (ATSB) was authorized by Congress to provide loan guarantees to struggling airlines, a program that some lawmakers and the Bush administration considered a wildly risky intervention in private industry.

But airlines are repairing their balance sheets and the stabilization board looks set to exit at a profit as another government agency, corporate pension plans insurer PBGC, finds itself an investor in at least two airlines.

ATSB Executive Director Mark Dayton said the board was very prudent with its lending but there was a lot of risk involved.

"At the time it seemed clear that the financial markets were closed to the airlines," Dayton said. "Given what had happened, it looked like we could see massive failures in the industry."

Dayton said the expected profit includes equity sales and fees that were charged above loan repayments. All of the money goes to the US Treasury.

Most big airlines opted against loan guarantees because they were unwilling to give the government a stake in their businesses as collateral, even if the decision compounded their losses and increased the chances of bankruptcy.

Six airlines were eventually approved for USD$1.6 billion in guarantees out of the USD$10 billion authorized by Congress.

The ATSB rejected more than half the airlines that applied, including United Airlines, which had its bankruptcy reorganization plan approved by a federal judge last week.

As the ATSB plans to get out of the airline business, the Pension Benefit Guaranty Corporation (PBGC) owns stakes in two carriers and could negotiate equity in two more.

The PBGC has assumed USD$10 billion in pension liabilities from United Airlines and the old US Airways and was eligible as an unsecured creditor in bankruptcies at both carriers to accept stock in the restructured companies.

The agency obtained 6 percent of US Airways and will take an estimated 20 percent share in United when it emerges from Chapter 11 bankruptcy in February, the PBGC said.

"We tend not to be long-term investors in these companies," said Randy Clerihue, a spokesman for the PBGC.

The PBGC still may negotiate equity in Delta Air Lines and Northwest Airlines, both bankrupt and both not ruling out the possibility of terminating pension liabilities if Congress does not approve legislation that could save their plans.

About a third of the projected profit from ATSB loans resulted from the merger of US Airways and America West Airlines last year. The board issued a USD$900 million guarantee to the old US Airways, which restructured in bankruptcy, and USD$380 million to America West. The board remarketed the loans and received warrants for equity, which were sold for USD$112 million after the carriers merged.

The board plans to sell its equity in World Airways and Frontier Airlines later this year.

The only loss from the loan guarantee program -- an estimated USD$20 million -- comes from a USD$125 million deal with bankrupt ATA Airlines.