WorldTraveler
Corn Field
- Dec 5, 2003
- 21,709
- 10,662
- Banned
- #1
Northwest Airlines Corp., the fourth-largest U.S. carrier, may need a loan to help it through bankruptcy because it is running low on cash, one of the carrier's advisers said.
The financing will be necessary because Northwest's cash balance is already "at unacceptably low levels and is heading lower," Seabury Securities LLC Chief Executive Officer John Luth said in a filing with the U.S. Bankruptcy Court in New York Tuesday.
Northwest's business plan doesn't show the Eagan, Minn.-based airline generating "significant" cash until 2009 or 2010, he said.
Northwest, unlike many companies in bankruptcy, did not arrange any loans to use while under Chapter 11 court protection. Most bankrupt companies get the loans to keep operations going while they try to reduce costs and stem losses. Northwest has had about $4 billion in losses since 2001.
"They need to raise capital," said Helane Becker, an analyst for Benchmark Co. in New York who does not have a rating on the company.
The company will also likely need at least $2 billion to exit bankruptcy, and as much as $7 billion later to update its aircraft fleet, Luth said. The $2 billion would be used partly to refinance any loans that the company gets during the bankruptcy, he said.
Northwest asked Luth to make the projections to help it gain court support for its attempt to secure $1.4 billion in employee wage and benefit cuts. Northwest last month reached interim agreements with its unions to save $446 million annually, and is still negotiating for the rest. The company has said it will seek court permission to void the contracts and impose new terms if no agreement is reached by mid-January.
The financing will be necessary because Northwest's cash balance is already "at unacceptably low levels and is heading lower," Seabury Securities LLC Chief Executive Officer John Luth said in a filing with the U.S. Bankruptcy Court in New York Tuesday.
Northwest's business plan doesn't show the Eagan, Minn.-based airline generating "significant" cash until 2009 or 2010, he said.
Northwest, unlike many companies in bankruptcy, did not arrange any loans to use while under Chapter 11 court protection. Most bankrupt companies get the loans to keep operations going while they try to reduce costs and stem losses. Northwest has had about $4 billion in losses since 2001.
"They need to raise capital," said Helane Becker, an analyst for Benchmark Co. in New York who does not have a rating on the company.
The company will also likely need at least $2 billion to exit bankruptcy, and as much as $7 billion later to update its aircraft fleet, Luth said. The $2 billion would be used partly to refinance any loans that the company gets during the bankruptcy, he said.
Northwest asked Luth to make the projections to help it gain court support for its attempt to secure $1.4 billion in employee wage and benefit cuts. Northwest last month reached interim agreements with its unions to save $446 million annually, and is still negotiating for the rest. The company has said it will seek court permission to void the contracts and impose new terms if no agreement is reached by mid-January.
