Great Lakes Aviation has reached a conditional debt-restructuring agreement with Raytheon Aircraft that could allow the struggling USregional to return surplus Beech 1900Ds to the manufacturer.

The Wyoming-based carrier owes Raytheon $16 million in due lease and finance payments.

Great Lakes says an agreement to restructure its $113 million in outstanding obligations to Raytheon is conditional on the airline obtaining a commitment for at least $5 million in new equity by 17 July. The agreement also requires the carrier to make lease payments of at least $800,000 a month until the restructuring closes.

The airline could apply for a US government loan guarantee, which would help secure additional capital. In a submission made to the US Securities and Exchange Commission, Great Lakes says it expects Raytheon to convert some of the debt into equity and to allow the surplus 1900s to be returned.

The airline, which codeshares with Frontier Airlines and United Airlines, has reduced its fleet by returning one 1900D and two 1900C cargo aircraft to Raytheon, and one Embraer Bandeirante to lessor Finova. Two 1900s, one owned and one leased, were destroyed in a fire in May, leaving Great Lakes with 37 1900Ds, two 1900Cs and seven Bandeirantes.

Great Lakes reported a first-quarter loss of $2.4 million, down from $8.6 million 12 months earlier. Operating revenues decreased by 28% as the airline reduced scheduled operations to allow it to focus on government-subsidised Essential Air Service routes, which are more profitable.

Source: Flight International