Air Transport World

April showers. (Continental Airlines Inc. asks Bankruptcy Court to remove Section 1110 protection from many of its aircraft that were financed through sale/leaseback programs) (editorial)

It never rains but it pours. And right now, owners of older Stage 2 aircraft are caught in a deluge that is washing away what little value remains in their 1970s and 1960s-vintage jets.

The latest drenching comes courtesy of the U.S. Bankruptcy Court, which decided-at the request of Continental Airlines-to remove Section 1110 protection f rom many of Continental's aircraft that had been refinanced through sale/leasebacks. Buoyed by the success of Continental's effort, Pan Am-also in Chapter 11-asked that Section 1110 protection be removed from some of its own aircraft (see "News Briefs," page 6).

Needless to say, the lessors who participated in the hundreds of sale/leasebacks over the past five years did so in the belief that they were entitled to the same protections that the people who finance new aircraft through operating leases enjoy. …

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