Republic Airways Holdings Inc., with a fleet of 300 aircraft, initiated chapter 11 reorganization in February and immediately filed a motion to reject leases on six smaller regional jets. Bankruptcy Judge Sean H. Lane of Manhattan wrote an opinion on April 8 summarizing previous decisions about returning surplus aircraft, and aircraft lenders and lessors lose again.
A secured lender wanted Republic, among other things, to reattach engines to the aircraft on which they were originally delivered. The lender also wanted documents and equipment returned along with the aircraft.
Citing other cases under Section 1110 where airlines were rejecting leases for surplus aircraft, Judge Lane said that the “surrender and return” language in Section 1110 does not require the airline to comply with return provisions in the leases. He quoted a decision from the Delta Air Lines Inc. case where the bankruptcy judge said, “[Y]ou get [the equipment] immediately and you get it as is, where it is.”
Judge Lane said the lender could file a claim for the costs resulting from sorting out the engines and delivering the property to the locations to which they should have been returned under the leases.
With regard to returning aircraft records, Judge Lane said the airline complied with its obligations under Section 1110 by having already made them available for pickup. He again allowed the lender to file a claim.
Judge Lane did require the airline to continue insurance coverage for 15 days after his ruling.
The written opinion on April 8 was an expansion of Judge Lane’s bench opinion on March 22.