National Airlines talking with new investors

Grace Leong

Tuesday, July 9, 2002 | 11:02 a.m.

Las Vegas-based National Airlines said Monday it has $8.65 million in equity under its bankruptcy reorganization plan but hopes to secure additional equity to improve its chances of being approved for a $60 million federal loan guarantee.

The airline's reorganization plan could take effect if the Air Transportation Stabilization Board -- the government entity that approves airlines for a $10 billion bailout package approved by Congress in November -- approves the loan guarantee National applied for on May 3.

Only one airline -- National rival America West Airlines -- has successfully obtained a loan guarantee.

National attorney Craig Hansen, at Monday's hearing in U.S. Bankruptcy Court, said the airline hasn't heard anything definitive from the ATSB but is in discussions with two potential sources to supplement its $8.65 million in equity.

"National has asked the ATSB for more time to chase down the two equity sources, and if we're successful, this could significantly enhance the likelihood of getting approval from the ATSB," he said.

National attorneys and officials declined to reveal who the two sources are and to specify how much equity is being offered.

Airline spokesman Dik Shimizu said the equity is to be used for general business purposes and that National's application for the loan guarantee can only "look better and better if it is able to get more cash from third-party entities because that strengthens the likelihood of National paying back its loan."

"National has not released how many or who the entities are that contributed to the $8.65 million equity," he said. "After our application, it came to our attention that there were two additional entities that may be willing to add to the ($8.65 million) by whatever amount we can negotiate for."

"Our discussions with these two entities have heated up of late," Shimizu said. "National is always looking for new equity, which is now scarce because the economy is not strong and a lot of people have lost money in the dot-com business and the airline industry has lost so much money since 9-11."

"Notwithstanding the two potential additional equity sources, our current application should be approved on its merit because it meets all criteria of the loan guarantee program, and in our opinion is a superior application to the one approved by the ATSB," he said.

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