Sun Country Airlines has won bankruptcy court approval for financing from fellow Petters Aviation subsidiary Elite Holdings.
The Minnesota-based carrier and its parent were forced into Chapter 11 after Petters Aviation's parent Petters Group Worldwide became involved in a federal fraud investigation.
Elite is also undergoing its own Chapter 11 restructuring due to the Petters fraud case. But prior to Elite's filing it cancelled purchase agreements with Airbus that resulted in the return of $9.5 million to the company. Elite previously sold and marketed Airbus corporate aircraft from a hangar subleased from Sun Country at Minneapolis airport.
Despite the lender and debtor being affiliates, Sun Country stressed to the bankruptcy court the loan was negotiated in good faith. Terms of the loan have not been disclosed.
Approval of the financing allows Sun Country to make lease payments on nine Boeing 737s it currently operates. In court documents Sun Country says on 5 December suspension of lease payment are no longer permitted under a stay in the bankruptcy code. The carrier's lessors, which include CIT and International Lease Finance Corp, are allowed to immediately repossess aircraft if Sun Country fails to meet lease obligations.
Financing from Elite also results in the restoration of wages for Sun Country employees to pre-bankruptcy levels, with additional raises scheduled for 1 January.
Source: Air Transport Intelligence news
