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Playing the EETC game

01 November 2005

Lenard Parkins and Kenric Kattner, of Haynes and Boone, and lead counsel for Atlas Air Worldwide Holdings, provide an essential guide to restructuring EETCs in bankruptcy.

Tags: Chapter 11  |  airline  |  Airlines; Enhanced Equipment Trust Certificate

No one can claim that Chapter 11 is fun. Airlines are faced with the almost impossible task of balancing their limited resources between the competing demands of lenders, lessors, labour and pension obligations, to name but a few. One of the least public, but most significant, problems that needs to be resolved is the ownership cost of the aircraft.

As many US aircraft are financed using enhanced equipment trust certificates (EETCs), this only adds to the problem. EETCs are very difficult to restructure, but this is essential to the survival of bankrupt airline.

The only bankruptcy case to date in which a successful and complete EETC restructuring has been implemented is Atlas Air Worldwide Holdings, which recently emerged from bankruptcy. At the conclusion of the bankruptcy case, the airline's entire fleet of 747-400 EETC-financed aircraft was restructured.

Atlas' liquidity crunch In mid-2003, Atlas was faced with a liquidity crunch and a...

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