National talking with two lenders

Tuesday, Oct. 30, 2001 | 9:55 a.m.

National Airlines is negotiating with two lenders to secure the financing needed to reorganize finances and emerge from bankruptcy.

Attorneys for the Las Vegas-based air carrier told U.S. Bankruptcy Court Judge Linda Riegle on Monday that the company is "well down the road" toward securing a loan and has negotiated with two lenders, one as a backup to the other.

The attorneys did not name the potential lenders and a company spokesman said after the hearing that they would not be disclosed.

National said in a court hearing last month that it planned to use federally guaranteed loans and a federal grant from Congress' aviation bailout legislation to finance a reorganization plan that would be satisfactory to a long line of creditors.

Craig Hansen, an attorney representing National, said most of the key creditors are supporting the airline's reorganization bid.

A letter of credit through Harrah's Entertainment Inc. that enables the airline to get cash immediately for tickets sold in advance has been renegotiated and will be in effect through the end of the year. Hansen said Harrah's is reducing the amount of the letter of credit as well as its fee.

The company's fuel provider, Mercury Air Group Inc., Los Angeles, has renegotiated terms of its agreement with the airline and the cost of fuel has fallen to about 65 cents a gallon -- about half what it was a year ago when National blamed those costs for spiraling into bankruptcy.

Laurence Frazen, another National attorney, said the airline has revised leases with all but one of the eight companies that provide its fleet of 15 Boeing 757 jets. Negotiations are expected to be completed with Ansett Worldwide Aviation, Australia, early next month, but deals are in place with the other lessors.

Hansen said the reorganization plan would be presented to the court Dec. 4 -- about a year after the Chapter 11 filing.