Airlease files suit against US Airways Group

Airlease Ltd. LP (NYSE:FLY - News) said on Tuesday it is suing US Airways Group Inc. (NYSE:U - News) because the carrier failed to return three leased MD-82 aircraft on time and did not pay rent due on the planes.

http://biz.yahoo.com/rf/020625/airlines_airlease_1.html

Does anyone in our little braintrust have a better read into this, and the other goings on? Why did US Airways unilaterally announce "strategic payment deferrals?" Odd. Merely to get ahead of the Airlease announcement? Could someone else be behind the Airlease suit? Will other lendors follow today? Is US Airways going to pull through with labor agreements, and a code-share partner by Friday? Will they go Chapter 11 with or without the agreements?

How much of a chowderhead was I to purchase way-too-much US Airways penny stock a few weeks ago?

How long's it been since US even flew this type of aircraft?

US Airways said its decision to defer payments wasn't related to its cash position, though it had only $561 million in cash and short-term investments at the end of the latest quarter.

After the airline's deferrals were made public Tuesday, aircraft lessor Airlease Ltd. said it had filed suit against US Airways because the carrier had failed to return three leased aircraft and did not pay rent due on the planes. A trustee for Airlease said it started the litigation after talks with US Airways over the return of the planes broke down.

http://www.chicagotribune.com/business/printedition/chi-0206260154jun26.story?coll=chi%2Dprintbusiness%2Dh ed

Airlease is postering for a better deal. They do not want the planes back, they want money. US probably offered them a lowball cash bid hoping Airlease would accept the cash and cancel the agreement and leave the MD80s in the desert to rot in the sun. Airlease has filed a lawsuit to get more cash. Filing the lawsuit is cheap, taking it to court with a string of lawyers in tow is a much more expensive proposition. Also remember that the outcome of a court decision could be US pays Airlease a small amount and Airlease just takes the planes.... bad for them because they can not place old MD80s back out in the market because no one wants them.

The REAL downside to all of this is that other creditors of US may see this as a "better get in line now" scenario because they know there is not enough cash and assets to cover everything US owes...

Somebody at Airlease obviously got upset. Those planes have a value still, and can be re-leased. They have good capacity, and are Stage 3 (quiet). I presume they want them back, along with some of the rent. It might be a ploy to assert title in case of a bankruptcy. Often the airlines sell pass through securities linked to such leases. I'm not sure which party would have a look through to the assets in that situation. Maybe a legal mind could comment on that one. If you recall, the decision to retire those had more to do with reducing type. It was the F-100's that had expensive leases. I do not believe they have suspended payments on anything they are still actively flying, with the exception of a couple of 737's which are already ticketed to go. This is theater, and we aren't in the third act yet.