Creditors Agree to Financing for Continental

Continental Airlines, which filed for bankruptcy protection in December, said Tuesday that some of its most important suppliers and creditors have agreed to provide up to $248 million in financing to ensure that it keeps flying.

The agreements in principle, reached with 15 of Continental’s lessors and secured creditors, include payment deferrals for 116 of the airline’s jets, 60 spare engines and eight commuter aircraft.

“We believe the significant financial commitments made by these lessors and secured lenders demonstrate their belief that Continental will emerge as a successful, financially sound, global carrier,” said Continental Chief Executive Hollis Harris.

On Monday, Continental Airlines Holdings Inc., the airline’s parent company, said it had ended talks to sell major assets and would seek to raise about $550 million in new capital to remain independent.

Continental said the latest financing agreements “substantially resolve” issues created by a judge’s ruling Monday that the airline would have to pay $58 million in aircraft leases.

U.S. District Judge Robert Gawthorp in Wilmington, Del., had reversed a Bankruptcy Court decision and ruled that lease payments had to be made within 60 days of a bankruptcy filing. Continental is appealing the ruling.

Under the agreements announced late Tuesday, lease payments will be deferred by up to 10 months at an annual interest rate of 12%, Continental said. The airline said the restructured leases would save it $2.5 million a month.

The lessors also agreed to provide $60 million in financing to pay for aircraft refurbishing, Continental said.