Midwest To Extend Suspension Of Debt Payments

Tue Jun 03, 2003 11:14 am

Midwest to extend suspension of debt payments
A spokeswoman for Midwest Holdings Inc. said the airline would extend the suspension of aircraft debt and lease payments indefinitely, according to a report from Reuters.

The Oak Creek-based airline had suspended payments on the financed portion of nearly 40 aircraft in March in order to renegotiate the deals and bring them in line with the reduced value of the aircraft.

The company is seeking reduced payments that would help improve cash flow for the struggling airline.

"We will extend the moratorium (on payments) from June 7," Midwest general counsel Carol Skornicka told Reuters. "We haven't set a deadline, but we are making progress."

Midwest Holdings operates business-class air carrier Midwest Airlines and regional connecting service Midwest Connect. Midwest plans to launch a low-fare format of Midwest Airlines flying to leisure destinations Aug. 1.

On May 22, a unit of U.S. Bancorp filed a federal lawsuit against Midwest in an effort to recover three months of unpaid lease payments on aircraft the bank financed. The unit is seeking more than $693,000, plus interest on the payments.

In April, Milwaukee-based Marshall & Ilsley Corp., another Midwest lessor, wrote off $19 million related to the carrying value of lease obligations for airplanes leased to Midwest Airlines.

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