Money-losing National expects rebound in business customers

Monday, Aug. 5, 2002 | 10:50 a.m.

Las Vegas-based National Airlines posted its 10th straight monthly loss in June, but airline officials say they expect to get a boost from an increase of business travelers in the future.

National's monthly operating report to the U.S. Bankruptcy Court in Las Vegas showed the airline losing $4.6 million in June, with $26 million in revenues and $30.1 million in operating expenses. The company also said it paid $395,318 in bankruptcy reorganization expenses in the month.

The results do not include contractual concessions National has received from aircraft lessors as part of its reorganization. With reduced rental costs of $2 million, $333,300 in other contract modifications and $1.3 million in "fresh start" accounting that all would take effect when the bankruptcy reorganization is completed, the airline would have lost $611,487 for the month, the company said.

Bankruptcy Court Judge Linda Riegle has approved the reorganization plan conditioned on the approval of a federal government-backed $60 million loan guarantee from the Air Transportation Stabilization Board. National is awaiting a decision from the three-member ATSB after filing its application more than three months ago.

In its June operating report, National reported $25 million in passenger revenues, $111,151 in charter revenues and $855,872 in other income.

Among the company's operating expenses for the month were $6.1 million in aircraft rents ($4.1 million under the new contracts), $5 million in wages and benefits, $4.9 million in fuel expenses and $2.3 million in airport rents and landing fees.

Since National filed for Chapter 11 bankruptcy protection in December 2000, it has lost $82.1 million.

Because the contract concessions already are negotiated as part of the reorganization, National Chief Executive Officer Mike Conway considered June to be a break-even month for the airline and said National is well positioned to attract business travelers as that market rebounds.

"While we're never pleased with losing any money, this result is close to break-even," Conway said. "The result is superior comparatively to almost any other airline with the exception of two, and those two are Southwest Airlines and JetBlue."

Conway said he is encouraged with "the changing airline dynamic in which passengers are showing a greater and greater preference to smaller low-fare carriers."

Conway said because business travelers are acting more like leisure travelers by buying further in advance and are considering low-fare one-stop airlines and not just nonstop carriers for coast-to-coast trips, National is seeing more bookings with greater yields.