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Braniff Wants to Extend $3 Million Payment Deadline

November 28, 1989

ORLANDO, Fla. (AP) _ Braniff Inc., unable to meet a bankruptcy judge’s deadline to pay $3 million to an aviation company for five leased jets, blamed it on a legal dispute that left little time to obtain financing.

Braniff is exploring ways to get the midnight Monday payment deadline extended, said company spokeswoman Ann Cook.

Lawyers and U.S. officials for GPA Group Ltd., an Irish leasing company, would not comment Monday.

Braniff is behind in other bills, including $1.6 million owed to Kansas City International Airport, Cook said. A meeting of Braniff’s creditors is scheduled for today in Orlando.

Orlando-based Braniff filed for protection from creditors under Chapter 11 of the Federal Bankruptcy Code on Sept. 28, its second such filing in seven years. The airline stopped flying Nov. 7 when it laid off most of its remaining employees.

Braniff, once an employer of more than 4,800, now has about 275 workers and is trying to continue as a charter carrier.

U.S. Bankruptcy Judge C. Timothy Corcoran said Saturday that GPA could sue Braniff to get the five aircraft back if the airline did not meet the deadline. Braniff took delivery of the planes before filing for bankruptcy.

Corcoran’s decision came after a five-day trial in a lawsuit brought by Braniff against GPA. Braniff claimed breach of contract when GPA canceled a lease agreement for 50 Airbus A320 jets a few hours before Braniff filed for bankruptcy.

″In large measure, we have been prevented from obtaining the financing for Monday’s payment because of the litigation with GPA,″ Cook said. ″Once the dispute involving the contracts was cleared up, we had only two days to come up with financing. We’re working on this.″

The airline’s most valuable asset, its lease and purchase agreements for the 50 jets, could not be subleased or sold until Corcoran’s ruling that the contracts for the Airbuses are valid.

GPA and other defendants in the lawsuit are parties in several complex agreements designed to enable Braniff to lease 26 Airbuses from GPA, buy 24 from Avsa SARL and finance the transaction. Braniff also had an option to buy another 50 Airbuses.

American Airlines has discussed the possibility of acquiring the Airbuses from Braniff.

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