AARON KARP / WASHINGTON DC
National Airlines has secured a $112 million financing package which the US low-fares carrier believes will allow it to survive in the long term.
The Las Vegas-based airline has been operating under Chapter 11 bankruptcy protection since December 2000, and its reorganisation plans had hinged on securing a $50.5 million loan guarantee from the US Government. But the Air Transportation Stabilization Board turned down its loan guarantee application last month, leaving the carrier on the brink of being grounded.
National has secured new cash equity and concessions from its lessors - including International Lease Financeand Finova - and creditors, and expects to emerge from bankruptcy in early October. The centrepiece of the package is a debt-for-equity exchange, which will leave creditors in control. The carrier says it has reduced operating expenses by around $50 million by re-negotiating lease rates and vendor contracts, and pay cuts. The source of the investment is believed to be Wells Fargo subsidiary Foothill Capital.
Source: Flight International
