CONTINENTAL Airlines has renegotiated the leases on most of the 35 aircraft (mainly Airbus A300s) grounded in January in a move to cut capacity. The aircraft have been returned to lessors, but Continental will save $152 million in 1995 and 1996, eliminate substantial operating-lease payments after 1996, and defer certain principal and operating-lease payments.
The airline will issue the lessors debentures worth $139 million which are convertible after August 1996 into Continental stock at $26 a share. The carrier says that it may issue a further $50-60 million of debentures to cover settlements under negotiation on the remaining grounded aircraft.
The carrier is not seeking shareholder approval to issue the debentures which, if all converted, would dilute currently outstanding stock by 23%. Any delay gaining approval would "...seriously jeopardise the financial viability of Continental," it maintains. Continental is "...considering refinancing options" to allow it to redeem the debentures before they become convertible.
Source: Flight International
