People Express warned that it may default.

The airline has warned debtholders that it faces a substantial third-quarter loss and may default if proposed buyer Texas Air Corp. doesn't inject more cash into the troubled discount airline. The disclosures came with the approach of People Express' self-proclaimed day of judgment Wednesday, the due date for $13.4 million in interest payments that the carrier says it cannot afford. The airline has said it needs quick approval on the merger from the Transportation Department to avoid defaulting on the payments.

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