National gets OK from judge for airplane lease

Friday, March 29, 2002 | 11:55 a.m.

A U.S. Bankruptcy Court judge has given Las Vegas-based National Airlines permission to lease a new Boeing 757 jet and company attorneys say they'll be back next month to ask for permission to lease two more planes.

Judge Linda Riegle told attorneys at a status hearing Thursday that she would consider the next two requests April 11.

Terms of the lease agreement, with International Lease Finance Corp., Los Angeles, were not announced in court. Tightly held National routinely does not disclose details of its aircraft leases. ILFC is a division of insurance giant American International Group Inc.

The new jets are important to National's plans to inaugurate service between Las Vegas and Seattle May 23. On that date, the company will add a fourth round-trip flight between Las Vegas and Dallas-Fort Worth in addition to starting three daily round trips between McCarran International Airport and Seattle-Tacoma International.

National currently operates 15 of the 175-passenger twin-engine jets and with recent service expansions has little margin for error in maintaining the schedule with 14 jets committed to regular service and one back-up plane.

Laurence Frazen, one of National's attorneys, said the lease agreement was brought to the court to make all the creditors aware of the company's plans. Riegle approved National's reorganization plan earlier this month, but the plan to emerge from Chapter 11 bankruptcy protection is dependent on the airline getting federal backing of a loan of up to $70 million. A lender already has approved a loan to the company, subject to guarantees by the three-member Air Transportation Stabilization Board in Washington.

Technically, National has not formally applied to the ATS board for a loan guarantee, a spokesman for the agency said Thursday. Kevin Tourek, corporate counsel for National, said meetings have been conducted with the agency's staff and draft documents have been submitted for review.

Tourek said only drafts are being submitted to prevent the documents from being made public.