Lenders And U.s. Tighten Screws


Nov 9, 2003
Lenders and U.S. Tighten Screws on Struggling Airlines

Published: December 7, 2004

n the airline industry's dark months after the September 2001 attacks, the federal government, banks, aircraft lenders and others came forward to help, giving the wounded companies plenty of leeway in the face of extraordinary circumstances.

But three years later, the benevolence is gone.

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Some quotes:

"Aircraft lenders, who did their part after the attacks by loosening the terms of some deals, are tightening up again."

"The market for aircraft is dramatically better around the world than it was 18 months ago and certainly two years ago," said Henry Hubschman, president of GE Capital Aviation Services, the industry's most powerful aircraft financing company.

But Mr. Hubschman of GE Capital Aviation said, "We can flex our muscles by moving our assets."

His company did just that last month at US Airways, when it struck a deal to take back 25 planes it had financed.

GE Capital Aviation is not the airline's only overseer. It is operating under strict cash limits set by the federal Air Transportation Stabilization Board, created to oversee $10 billion in loan guarantees that were part of a post-Sept. 11 bailout plan.

On the offense, Mr. Hubschman says he wishes he could take more planes back from US Airways and its competitors. His company has found customers for 10 of the former US Airways aircraft, all outside the United States, proof that the company's activism is working to its advantage.

"We have wonderful demand in places around the world," Mr. Hubschman said.