MGM MIRAGE, Venetian explain their decision against investing in National Airlines

Friday, Jan. 12, 2001 | 11:28 a.m.

Just hours before National Airlines declared bankruptcy, Harrah's Entertainment Inc. attempted to convince other Las Vegas gaming operators to invest with it in the struggling airline.

Harrah's found no support for its arguments that other gaming operators benefited from National's flights into Las Vegas more than Harrah's did. Since the bankruptcy, some analysts have pointed to the possible loss of Las Vegas' fifth-largest airline as a reason for concern going into 2001 -- and Harrah's has been critical of its neighbors on the Strip.

Yet at the American Gaming Summit Thursday, executives with MGM MIRAGE and the Venetian again defended their decision not to invest in National -- and said they aren't going to back off from their decision.

"We certainly don't want to see it close, but we did not invest in it, and we will not invest in it," said Jim Murren, chief financial officer for MGM MIRAGE. "Our shareholders invested in us to do what we do. We are not venture capitalists.

"Airlines come and go. They have more lives than cats."

During a presentation, Harrah's Treasurer Charles Atwood said the company took an $8.9 million loss from National in the first quarter, but posted a $1.2 million profit from National over the next six months before rising fuel prices put it back in the red. Harrah's owns 48 percent of National.

Though Las Vegas Sands Inc. executives weren't approached by Harrah's, President Bill Weidner said his company also looked at the possibility of investing in National. However, the operator of the Venetian also passed.

"Our strategy is to be an attraction to the city, by doing a lot of conventions and reaching out to the (free and independent traveler) market," Weidner said. "Others might have a strategy of marrying cheap (airline) seats to inexpensive rooms, but that really wasn't our strategy."

Weidner, like Murren, argued that other airlines would fill the gap left by National if resort operators continued to create demand for airlines.

"As long as we have a good strong product, (airlines) will pick up the flights," Weidner said.

An audience member challenged this argument, noting that flights into Las Vegas carried far lower profit margins than flights into other cities, and wouldn't be as attractive to other airlines for expansion.

Weidner responded that airlines would continue to have an incentive to build up evening flights into Las Vegas, since the alternative was to leave expensive planes sitting idle at night.