A request by UAL's United Airlines for a $1.6bn loan guarantee was rejected on Thursday night, dealing a serious blow to the carrier's effort to emerge from bankruptcy protection. 

The Air Transportation Stabilisation Board, which oversees the loan guarantee system, said  two members - Ned Gramlich from the Federal Reserve, and Brian Roseboro, treasury undersecretary for domestic finance - had voted to deny the application. Jeff Shane, undersecretary for transportation, had voted to defer a decision to next week.

The rejection is a setback for the company, which has spent the past 18 months restructuring in bankruptcy protection. The carrier believes its chance of exiting bankruptcy this year relies heavily on securing the loan guarantee.

However, in a twist that emerged after the ATSB issued its statement, the Treasury Department said it was open to reconsidering United's case should it submit an approved application in coming days.

The unexpected move by the Treasury, effectively overruling its own representative's decision, has been spear-headed by John Snow, treasury secretary. He has come under considerable pressure this week from Dennis Hastert, the influential speaker of the House of Representatives.

Mr Roseboro and Mr Gramlich were understood to be furious about the prospect of letting United reapply for the loan, according to several people involved in the talks. United Airlines said it was, "perplexed by the announcement made by the ATSB. We have reason to believe we are in the midst of a process with the ATSB to make our application acceptable and that a decision was premature. We do not believe that the Board was made fully aware of the important modifications United was willing to bring to the table."

The ATSB in its decision noted United's cost-cutting efforts and said that a majority of the board believed that the likelihood of United succeeding without a loan guarantee is sufficiently high so as to make such a guarantee unnecessary.

United executives this week had flown to Washington in an effort to negotiate further concessions.

On Tuesday, Mr Hastert rang Mr Snow to lobby on behalf of United, an intervention that is understood to have helped the carrier continue its negotiation ATSB officials.

The airline now faces a highly uncertain week ahead. It is expected to make a number of concessions if it is to reapply, including the bringing in of additional private equity, cutting costs further and potentially, the termination of some of its pension plans.