Herman giving up on National for now

Friday, Feb. 1, 2002 | 11:16 a.m.

The former chief executive of a British airline who made an unsuccessful bid to acquire National Airlines said he's given up the chase -- for now.

Ian Herman, chairman of Old Mission Assessment Corp. and the former CEO of British World Airlines, said he's looking at acquiring another airline that serves the Las Vegas market while waiting to see if National's bid for a government-backed loan guarantee falters.

Herman also acknowledged an Internet publication's report that one of his investors was convicted of fraud 12 years ago.

Thomas K. Jolitz, Traverse City, Mich., an Old Mission investor, was convicted of fraud in Florida in 1990. The Deal.com reported that Jolitz was convicted of using the bank account of a minister to defraud several credit card holders and two banks of $436,000.

The Florida Department of Corrections said Jolitz was placed on probation and never served prison time.

Herman said Jolitz explained the conviction when he was brought on as a consultant to Old Mission 11 months ago. Herman said after several months with the company, he was issued stock instead of being paid and was made an employee to entitle him to health care benefits to treat his diabetes.

"Tom Jolitz is not a director of the company, nor is he an officer, he is not an executive," Herman said. "He is a valued staff member who in the past paid a debt to society."

Herman said he was disappointed that personal attacks were leveled at a time when Old Mission was pursuing the acquisition of National and questioning the existing plan.

Herman questions whether National's reorganization plan, which includes converting debt to equity, would be allowed by the Department of Transportation because many of the lessors getting National Airlines stock have foreign ownership. Airlines operating in the United States can't have more than 25 percent foreign ownership.

Five of the eight lessors of National's fleet, all eligible for equity, are from foreign countries.

A spokesman for National said Wednesday that airline executives are aware of foreign ownership restrictions and would be sure to be in compliance.

Dik Shimizu of National said because of the dilution of the stock among a number of creditors it's unlikely that more than 25 percent of the equity of the airline would be held by foreign companies.

Herman said he was disappointed the Old Mission bid wasn't seriously considered. He's looking at acquiring one of two other airlines that serve Las Vegas -- but he wouldn't name the companies. One possibility is Sun Country Airlines, a Minneapolis company that discontinued scheduled service in December, but continues to run a charter operation.

"Ultimately, we intend to operate National or a competing airline with service to Las Vegas," Herman said.

Shimizu said Wednesday that under new lease terms, lower fuel costs and no bankruptcy cost expenses, National would have been operating in the black for several months.

He said if the company can produce profits on a consistent basis, the company would consider going public, a strategy National officials discussed publicly six months before the airline was forced into bankruptcy.