Updated from 3:34 p.m. EST
, a discount airline, filed for Chapter 11 bankruptcy protection Tuesday, saying it will continue normal operations as it works on a reorganization plan with its creditors.
"Given the company's current financial condition, we had no choice but to file for Chapter 11 protection," said Morris Nachtomi, Tower's chairman and chief executive. He was not more specific about the company's problems.
The airline, which is based in Queens, N.Y., said it had reached a deal with an existing lender, GMAC Business Credit, to obtain $18 million in secured debt to continue its regular schedule of flights.
"We do not expect any interruptions in service or significant changes in the company's current operations," Nachtomi said in a statement.
Trading in Tower's shares was halted early Tuesday on the Nasdaq stock market, and the stock will not open until Tower has fully satisfied a Nasdaq request for more information about the bankruptcy filing. Before the halt, Tower was down 1/16, or 4%, at 1 1/2.
On Feb. 10, Tower had announced a restructuring that included 300 layoffs, or 18.5% of its workforce. The company also said it would reduce its air fleet by returning surplus aircraft to lessors.
But analysts said that the restructuring came too late to help the cash-strapped company deal with the blow of rising fuel prices.
"They've been short cash for a while, and fuel prices have pushed them over the edge," said Glenn Engel, an airline analyst at Goldman, Sach. The investment firm had rated Tower a market perform and underwrote a stock offering for the company in 1994.
Engel said the company would probably be able to dig its way out of bankruptcy, especially if it works to reverse its reputation for poor reliability and if it narrows its business to its most popular routes, including New York to Tel Aviv.
"A lot of the company's problems are self-inflicted because reliability has suffered as the company has grown," he said. "If they can run a good airline, and hunker down to their core set of routes, they can probably start performing again."
The company offers air service from its home base at John F. Kennedy International Airport to several major U.S. cities, as well as Greece, Puerto Rico, the Dominican Republic, Israel and Paris.