Chicago – A Chicago bankruptcy court on Monday granted a request by United Airlines parent UAL Corp. to refinance the debt on some of its aircraft.
The move heads off a possible repossession of the aircraft as the airline continues its push to emerge from bankruptcy.
The decision by Judge Eugene R. Wedoff of the Northern District of Illinois Bankruptcy Court paves the way for United to pay off the senior debt for the 14 aircraft. In a hearing July 27, Wedoff had already authorized United to purchase the junior debt.
The deal will cost United about $293 million, according to court documents.
United said it has sufficient money on hand to temporarily fund the purchase but that it has secured an agreement with JP Morgan Chase to refinance the purchase. As part of the motion granted Monday, United is authorized to pay JP Morgan up to $1.46 million in initial underwriting fees on the loan.
The refinancing will lower its costs for the aircraft, United said in the court filing.
The news comes as the airline prepares to file its reorganization plan aimed at concluding the Chapter 11 case that began in December 2002. United was due to present its reorganization plan last week but said it would delay the filing by about a month to give the airline and its creditors more time to review the complex and extensive documents.
United, the second-largest U.S. airline by traffic, has made progress in its efforts to cut costs as it seeks to reorganize.
Among the strategies, it reduced its fleet of aircraft to 458 at the end of the second quarter, down 13 percent from a year earlier.
