NEW YORK_Northwest Airlines Corp. got approval for two financing deals Thursday that will help the company add new planes and cut the costs of existing planes.
Airbus and United Technologies Corp.'s Pratt & Whitney Engine Division will provide the financing.
The U.S. Bankruptcy Court in New York City agreed to keep many specific terms of the pacts - including the total number of planes to be financed - confidential for competitive reasons.
There were no objections to the finance agreements, and an attorney representing Northwest's unsecured creditors said he favored the deal.
The deals give Northwest, of Eagan, Minnesota, "a critical restructuring of its obligations for both planes in service and for ones to be delivered," creditors committee attorney Scott Hazen said. It also limits claims Airbus can make against Northwest and returns some cash to the company, he said.
Under the Airbus pact, the European jet maker will finance 85 percent of the costs of Airbus A319s to be delivered within weeks as well as 10 A330s scheduled for delivery in 2006 and 2007. The agreement also gives Northwest what it called "favorable revisions" to the delivery schedule for the planes, and allocates prepayments Northwest made before filing Chapter 11 to the plane costs. The prepayments totaled about $100 million (€84.23 million).
Northwest, the world's fourth-largest airline, also has the option to cancel purchase plans for some A319 and A320 planes it has ordered.
United Technologies will finance other Airbus planes that will be powered by Pratt and Whitney engines. The total value of the financing wasn't disclosed.
Judge Allan Gropper said he would sign orders approving the pacts once they were presented in their final form.
Separately, attorneys for Northwest said they reached an agreement with JPMorgan Chase & Co., the lead lender on its $975 million (€821.26 million) credit facility, to make $24.5 million (€20.64 million) in interest payments on the loan and pay certain fees. With those payments made, Northwest would have leeway to use collateral securing the JPMorgan loan to secure other obligations.
That could include a Chapter 11 loan, known as a debtor-in-possession financing, or a loan to help Northwest exit bankruptcy, attorney Bruce Zirinsky told the court. The assets securing the loan are some of Northwest's most valuable - its Pacific routes, landing slots in Japan and about 50 aircraft - and are appraised at more than the value of the JPMorgan loan, he said.
Zirinsky said a DIP loan is "a work in progress," and noted it is likely JPMorgan and the other lenders involved with the current loan would participate in any DIP or exit financing agreement.
Christopher Scinta is a correspondent for Dow Jones Newswires.