The U.S. Bankruptcy Court approved Republic Airways Holdings’ motion for an order (i) authorizing the Debtors to transfer title to and abandon certain owned aircraft and engines and reject related aircraft lease and (ii) authorizing, but not directing, the Debtors to fulfil their obligations under an engine purchase agreement and directing Citibank to take all steps to cooperate with the closing of same.
As previously reported, “Republic owns or leases a fleet of approximately 300 aircraft, many of which are subject either to secured debt or lease financing arrangements. Republic seeks to streamline its operations by operating a single aircraft type (E170/175) and returning out of favor aircraft types (Q400, ERJ-145, and ERJ-140). In furtherance of this business strategy, Republic intends to utilize the chapter 11 process to retire underutilized and idle aircraft and engines from its fleet through rejection or abandonment. This motion is the first step in that process….Certain of the aircraft and engines that the Debtors propose to surrender, return, transfer title to, or abandon are subject to liens of Citibank (‘Citi’) pursuant to that certain Mortgage and Security Agreement, dated July 22, 2015….The current principal amount outstanding under the Citi Credit Agreement is approximately $23 million.”
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