America West called close to bankruptcy

Wednesday, Sept. 19, 2001 | 10:54 a.m.

Las Vegas-based National Airlines announced a ticket sale today designed to stimulate air travel.

National's "Get America Flying" campaign offers round-trip fares of $25 to San Francisco and Los Angeles, $50 to Dallas and Chicago and $75 to Miami, Philadelphia, New York or Newark, N.J. The hitch: Travelers have to leave on a Tuesday in the next four weeks, stay overnight and buy the ticket at least two days in advance. Travelers can make their return flight on any day.

National plans to donate $1 of every ticket sold during the promotion to a fund set up by the airline to benefit the families of flight crews who died in four crashes of planes hijacked by terrorists Sept. 11.

America West Airlines, a big Las Vegas carrier reeling from Monday's stock sell-off during which the company lost 65 percent of its value, could be headed for bankruptcy if government help doesn't arrive.

Industry observers say the Tempe, Ariz.-based carrier, the second-busiest airline at Las Vegas' McCarran International Airport, was in a precarious financial position even before last week's terrorist attack.

When airliners were hijacked and crashed into the World Trade Center in New York and the Pentagon in Washington, all airlines suffered the repercussions.

America West may be particularly vulnerable, experts say, because its two biggest cities -- Phoenix and Las Vegas -- are big leisure markets. While both the leisure and business travel sectors are hurting, analysts say the leisure side is feeling the brunt of the downturn because people aren't in the mood for pleasure trips.

"It's hard to say with finicky investors," said airline analyst Mike Boyd of the Boyd Group, Evergreen, Colo. "America West could be a little more vulnerable because of leisure travel. But then, some investors may just be selling because they heard they should from somebody else."

America West Holdings Corp., the holding company of the airline that had 83 daily round trip flights to and from Las Vegas before last week's disaster, had its stock fall $5.60 to $3 on Monday. The next day, America West had a 30-cent rebound, closing Tuesday at $3.30.

In early trading this morning, the stock price was down 14 cents a share to $3.16.

The airline announced Monday after the market closed that is reducing operations by 20 percent and laying off 2,000 employees. Tuesday, the company specified what the cuts will mean to Las Vegas routes: the elimination of 10 daily flights.

Before last week's attack, America West had 84 round-trip flights a day to Las Vegas and about 1,000 employees.

Two round-trip flights a day are being cut to both New York's John F. Kennedy International Airport and Phoenix. One daily round trip is being cut to Washington's Ronald Reagan National Airport, which is closed, and to and from Cleveland, Milwaukee, Minneapolis, San Francisco and Palm Springs, Calif. The airline said a new schedule would be published Oct. 28 that may have other changes.

Meanwhile, the director of the Aviation Institute at George Washington University said America West is among five air carriers on his "most endangered airlines" list.

Darryl Jenkins said America West is in danger of having to file for bankruptcy protection in the aftermath of the terrorist attacks. He said America West would have difficulty surviving a bankruptcy filing because of previous problems it has had with on-time and maintenance records, the Arizona Republic reported.

Jenkins also cited Continental, Northwest, US Airways and American Trans Air as bankruptcy candidates.

The Republic also reported Tuesday that a Merrill Lynch report indicated that America West had only 23 days of operating cash on hand. The company already is heavily leveraged and will have higher costs when it takes delivery of new aircraft from Airbus Industrie.

Boyd said America West is one of many airlines that could be struggling enough to consider a bankruptcy filing.

"Go to the Yellow Pages, look under airlines from A to U," Boyd said. "Those are the ones that could possibly file."

But if Congress delivers on an aid package, estimated at between $15 billion and $24 billion, America West and several other airlines could survive. The package could include immediate $5 billion grants.

Transportation Secretary Norman Mineta and other senior administration and congressional officials spoke to airline executives on a conference call Tuesday.

Douglas Parker, America West's chairman, president and chief executive officer, also met Tuesday with Sen. Harry Reid, D-Nev., and other legislators on the company's status,

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