US low-fares carrier ATA Airlines warned last week it may have to file for Chapter 11 bankruptcy protection if it fails to restructure its aircraft leases.
The airline says it has signed letters of intent with lessors Boeing Capital Services, GE Capital Aviation Services (GECAS) and International Lease Finance (ILFC) to delay payment on several Boeing 737-800s and 757-300s until 2005, and suspend some aircraft deliveries. The airline says it will continue lease payments until the leases are renegotiated.
It does not say whether it will revise its expansion plans, which include a 10% increase in capacity by year-end. But it warns: "If the company is unable to reach a satisfactory agreement with its creditors it may be forced to restructure its debts in bankruptcy."
Such a move could cause more damage to the lessors, which already risk being left with large numbers of unplaced aircraft over the next two years as demand from customers fails to recover to match deliveries to lease companies.
They must also deal with lease payment defaults from other troubled airlines such as United Airlines and Hawaiian Airlines, both now in Chapter 11 (Flight International, 12-18 August).
Source: Flight International
