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VANGAURD AIRLINES into Chapter 11

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VANGAURD AIRLINES into Chapter 11

Old 30th Jul 2002, 14:17
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Red face VANGAURD AIRLINES into Chapter 11

Vanguard Airlines suspends operations, plans bankruptcy filing
Tue Jul 30, 9:14 AM ET
By DANA FIELDS, AP Business Writer

KANSAS CITY, Missouri - Vanguard Airlines suspended operations Tuesday, saying it would lay off nearly all its employees and file for bankruptcy organization.



The Kansas City-based discount carrier has never shown an annual profit in eight years of operation. A recorded announcement on its reservation line early Tuesday said all Tuesday and Wednesday flights had been canceled and all other flights scheduled after that have been suspended indefinitely.

"The company is seeking funds in order to resume operations," the announcement said. "The company intends to file for protection under Chapter 11 of the Federal Bankruptcy Code."

Elizabeth Cattell, Vanguard's vice president of marketing and advertising, said nearly 1,100 employees, including about 915 in Kansas City, will be terminated before the filing. A crew of about 60 will stay in hopes that additional financing can be obtained.

Cattell said Vanguard had made arrangements for ticket-holders to buy discounted tickets from Frontier and National airlines, and it is talking to other carriers about similar arrangements.

Vanguard's chairman and CEO, Scott Dickson, told The Kansas City Star: "We have done everything in our power to avoid today's actions."

The airline industry has been under immense financial pressure because of the economic downturn and the impact of last year's terrorist attacks. In the second quarter, American carriers reported more than dlrs 1.4 billion in losses.

Other smaller carriers, such as Midway Airlines and Sun Country Airlines, have also filed for bankruptcy in the past year.

Sun Country resumed operations in March after shutting down earlier in the year. Midway, meanwhile, which filed for bankruptcy a year ago, could be forced by a bankruptcy court judge in North Carolina to shut down and liquidate its assets. The Morrisville, North Carolina-based carrier was accused by a court administrator last week of filing "incomplete, evolving and conflicting" financial data with the court.

Vanguard's financial problems are not new. Its last quarterly profit was in 1998.

With a fleet of six Boeing 737s and seven MD-80s, Vanguard has specialized in low fares. Its recent schedules listed 17 destinations.

Last month, Vanguard requested a dlrs 35 million loan guarantee from the Air Transportation Stabilization Board, a federal agency established by Congress to assist the ailing industry in the wake of last year's terrorist attacks.The airline had not received a decision on that request.

It wasn't the first request Vanguard had made to the agency. In May, the board decided not to approve a dlrs 13.5 million loan guarantee sought by Vanguard, saying the company's proposal "did not provide reasonable assurance that Vanguard will be able to repay the loan."

In a July 18 interview, Dickson told The Associated Press he thought Vanguard would be able to find funding to restructure its debt. He added, however, that "bankruptcy is not necessarily to be feared."

"In the airline industry, more often than not you can keep right on flying through bankruptcy. I mean, most airlines do," he said.

___

Associated Press Writer Amy Shafer in Kansas City contributed to this story.
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