The new Pan Am!

By Michael McCord
mmccord@<hidden>


PORTSMOUTH - Boston-Maine Airways, which operates flights out of Pease Airport, has admitted that its former legal counsel submitted false financial information documents to a federal agency.
The latest revelations by Boston-Maine, the successor company to Pan Am, came as the company is requesting certification to expand its fleet of Boeing 727 aircraft from three to seven planes. The company now flies out of Portsmouth with the name of Pan Am Clipper Connection.
In reviewing the airline’s certification request, William Bertram, a U.S. Department of Transportation official, had questioned the conduct of former Boston-Maine Airways general counsel John Nadolny and called for "further investigation" into Boston-Maine’s ethical standards.
Responding to Betram, Boston-Maine said in legal documents filed with the DOT Tuesday that during an internal investigation it discovered Nadolny had falsified investment account and cash balance amounts in documents submitted to the DOT as evidence of the company’s fiscal viability to run an airline.
The company said there was a "substantial discrepancy" in the amounts submitted by Nadolny and bank records at the time. The company did not include the exact dollar amount of the discrepancies in Tuesday’s filing. But the company said its senior management felt "shock and astonishment" about the discrepancies and that an "expanded investigation is now under way" into Nadolny’s actions which the company called a "stunning betrayal."
The company said that Nadolny "acknowledged altering the figures" and "offered no explanation." But Boston-Maine insisted that Nadolny acted alone and that senior management knew nothing about the incidents. The company said it has reported these events to the Massachusetts Bar and "will cooperate with any investigation that might result."
In June, the airline admitted that that Nadolny had forged a surety bond as part of a legal settlement with some of its former pilots. The company said that Nadolny had resigned from his positions with Boston-Maine, Pan Am and other related companies to the parent firm, Guilford Transportation, which is owned mostly by Timothy Mellon, an heir to the Mellon Bank family fortune.
A lawyer with the Airline Pilot’s Association, which is opposing Boston-Maine’s certification, said the latest revelations only confirm ALPA’s contention that Boston-Maine is unfit to run a public-serving airline.
"This is unprecedented and as bad as we thought," said Marcus Migliore, a senior attorney for the Air Line Pilot’s Association, from his office in Washington.
"We don’t believe and don’t find it credible at all that Mr. Nadolny acted alone. That’s not how they (Boston-Maine) work. This does relate directly to their fitness to run an airline," Migliore said.
Telephone messages seeking comment were not returned by Boston-Maine attorneys in Portsmouth and Washington. Attempts to contact Nadolny also were unsuccessful. In previous filings, Boston-Maine has accused the ALPA of personally attacking the airline’s management team and trying to drive it out of business.
Boston-Maine said in Tuesday’s filing that soon it will submit "new and verified evidence of its working capital" to the DOT "that will further prove the uninterrupted financial fitness" of the airline.

8-5-2005

By Michael McCord
mmccord@<hidden>

PORTSMOUTH - A federal investigation has put on hold a Pease-based airline’s plans to expand its operating fleet.
The U.S. Department of Transportation has launched an official investigation into fraudulent information submitted by Boston-Maine Airways.
Boston-Maine, which operates out of Pease Airport as the Pan Am Clipper Connection, has requested certification from the DOT to expand its Boeing 727 fleet from three to seven aircraft.
But that certification process has now come to a halt, a week after the airline admitted in legal filings that John Nadolny, the company’s former legal counsel, had altered data from bank statements intended to support the airline’s financial fitness to operate as an airline.
This admission came a month after Boston-Maine had also revealed that Nadolny provided a false surety bond in an unrelated settlement case with the Airline Pilot’s Association. (The airline pilot union opposes Boston-Maine’s request for certification by the DOT, claiming that the airline is unfit to operate.)
The recent revelations about Boston-Maine and its former general counsel prompted Assistant Secretary of Transportation Karan Bhatia to request that the department’s inspector general launch an investigation into the incidents.
Bhatia has asked investigators to determine the truthfulness of Boston-Maine’s contention that Nadolny acted alone.
"In particular, I ask that your investigation consider whether Mr. Nadolny’s actions were limited to only those instances that were previously disclosed and whether other individuals employed by Boston-Maine were involved in, or knew of, Mr. Nadolny’s actions," Bhatia wrote.
David Barnes, a spokesman for the inspector general’s office confirmed that the investigation has begun. When asked how often the inspector’s general’s office becomes involved in investigations relating to an airline’s certification, Barnes said, "not very frequently."
Boston-Maine is the successor airline to Pan Am, which was bought out of bankruptcy in 1998 by Guilford Transportation Industries, which is predominantly a private railroad company. Guilford’s major stockholder is Timothy Mellon, an heir to the Mellon family banking fortune.
The airline has had its headquarters at Pease since 1999 but has not operated a consistent flight schedule. In legal filings, Boston-Maine said that Pan Am lost $130 million during its six-year existence before Guilford turned over its operating license and created Boston-Maine to replace it.
Earlier this week, Boston-Maine scuttled plans to operate flights out of the Youngstown-Warren Regional Airport in Ohio. According to the Valley Business Journal, local airport officials withdrew an offer of a $250,000 marketing plan to promote the airline after word of the company’s legal troubles surfaced last week.
Over the past year, Boston-Maine has repeatedly asked the DOT to expedite the certification process so it can proceed with expanding its fleet and route system.
But in her letter, Bhatia wrote, "My office intends to defer action on all open dockets regarding Boston-Maine’s authority until such time as I receive your investigative report and my staff has fully reviewed its conclusions."