Loans not coming easy to struggling U.S. Airlines

American carriers are nervously biting their nails as they struggle to find lenders whilst interest rates keep rising.

Carriers caught between borrowing to refinance debt and purchasing planes include American Airlines, US Airways Group Inc. and Continental Airlines Inc.

According to Bloomberg, American has $1.1 billion in debt due this year, US Airways is looking for funding for five planes and Continental is managing credit to receive aircraft deliveries one at a time rather than in bulk. Even the world’s biggest carrier, Delta Air Lines Inc. has $3 billion of debt due in 2010.

Airlines have to deal with loans with higher interest rates too, with GE Capital Corp., Boeing and Airbus, only lending out shorter term loans with higher interest rates.

“No U.S. airline will take aircraft without securing financing, so either Airbus needs to step up and help US Airways fund those A330s or, if no one else does, they will be deferred” said analyst Mark Streeter, JPMorgan Chase & Co.

The falling demand for air travel is also burdening U.S. carriers, and without new loans to pay off debts or buy new jets, experts are predicting airlines will be forced to use their own cash to deal with the recession.

“You’re looking at possibly having to burn the furniture for heat until the credit markets loosen up” said analyst Hunter Keav, Stifel Nicolaus & Co. in Baltimore.

“We’re not there yet, but it could get that serious.”