Harrah’s CEO urges support for National

David Strow

Wednesday, Dec. 12, 2001 | 10:50 a.m.

Harrah's Entertainment Inc., the largest stockholder in bankrupt National Airlines, doesn't expect to be an investor in the reorganized Las Vegas company.

But Harrah's chairman and chief executive is repeating his hope the Las Vegas-based airline will be able to successfully emerge from bankruptcy and keep flying -- and urged the Las Vegas gaming industry to do whatever it can to help the airline.

"We must support National Airlines," Phil Satre said at Tuesday's Conference on Travel and Tourism.

The gaming industry in Las Vegas has a vested interest in seeing airlines continue their service unabated to the city. With an estimated 46 percent of Las Vegas tourists getting to the city by air before Sept. 11, "even the smallest reduction in tourist volume means millions in lost revenues every day," Satre said.

But National has been particularly supportive of these efforts with its "Get America Flying" program, which offered customers steeply discounted round-trip tickets Mondays through Wednesdays -- $25 to Los Angeles and San Francisco, $75 to East Coast cities. A number of hotels partnered with National on the program, offering one night free to guests who flew on the discounted tickets.

"That was an immediate impetus for travelers," Satre said. "All of us benefitted during that period."

Harrah's owns 48 percent of the airline's stock, and had tried unsuccessfully before the bankruptcy to get other casino companies to invest in National.

National submitted a reorganization plan with a bankruptcy judge earlier this month that would use a federally guaranteed loan of at least $45 million to reorganize the airline. Under the plan National would remain an independent company.

"(The reorganization plan) is a way of keeping the airline flying, which we think is very important," Satre said.

It appears Harrah's will not be involved in that new company as an equity owner. The company has already written off its investment in National.

"Our equity position is history," Satre said. "The only thing we're working on now is getting our letter of credit reduced to nothing."

The letter of credit extended to National lets it collect cash on advance ticket sales paid for by credit card. It started at $16 million, and has been reduced to under $13 million. The reorganization plan calls for Harrah's to continue extending the letter of credit through Dec. 31, 2002.