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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.
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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