Northwest Airlines Corp. has set up a $1.375 billion debtor-in-possession loan that can be converted to finance its departure from bankruptcy protection, according to bankruptcy court filings.
The funding, by a group of lenders led by Citigroup Inc., includes money to pay off $1.125 billion in pre-bankruptcy loans and a new $250 million revolving loan, the airline said in a court filing Tuesday night.
Pre-bankruptcy debt to be paid off includes $650 million owed to U.S. Bancorp and $370 million owed to the Pension Benefit Guaranty Corp., according to a bankruptcy court filing.
The new financing would be converted into financing to exit bankruptcy, Northwest said. The new credit is secured by Northwest assets. Northwest, the nation's fifth-largest carrier, said in the filing that it could not get unsecured credit.
The financing would need the approval of the bankruptcy court in New York, where Northwest filed for Chapter 11 protection in September. It's also dependent on Northwest getting a new contract with flight attendants. It settled with those workers on Monday, contingent on rank-and-file voting expected to end July 31.
On Wednesday, Northwest said it reached a tentative agreement with the union that represents its 40 flight simulator technicians. Those workers had voted down a concessionary proposal from Northwest in March.
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