FINE AIR FACES DETERIORATING FINANCES

FINE AIR FACES DETERIORATING FINANCES    Fine Air Corp., the parent company of Miami-based all-cargo carrier Fine Air and Arrow Air, has entered negotiations with its major creditors to restructure its long-term debt after deferring a $9.4 million interest payment due June 1.
   Standard & Poor’s lowered its credit rating on Fine Air on Monday after the carrier announced its was discussing debt restructuring options.
   Fine is one of several U.S. carriers, including Kitty Hawk Inc. and Polar Air Cargo, that are facing serious financial difficulty due to federal aircraft noise rules that went into effect January 1 banning the operation of some older freighter planes.
   Fine says it needs to raise about $10 million in additional financing or from asset sales to meet cash requirements through the end of the year. Fine is looking for capital from various sources, including new credit facilities or other financing for operations, purchase or lease financing for hushkits needed to comply with the noise rules, and by selling non-core assets.
   Fine Air has said it could miss the June 1 interest payment all together if it does not obtain additional capital.
   Fine used a $200 million debt offering in 1998 to expand its Latin American network — $115 million of which went to the purchase of Arrow Air last year.
   Fine had said it would be fully compliant with this year’s new noise regulations, but still needs to buy hushkits to get part of its DC-8 and L-1011 fleet in the air.
   The carrier reported an operating loss of $2.3 million in the first quarter this year.
   In March, Fine Air became the first airline to be convicted of a federal crime arising from a fatal aircraft accident. Federal prosecutors convicted Fine of destroying and falsifying records related to the August 1997 crash of one of its freighters that killed five people near Miami International Airport.
   Fine Air was preparing in the summer of 1997 for an initial public stock offering that was delayed after the fatal DC-8 crash.