National reports loss of $4.6 million for April

Wednesday, June 19, 2002 | 11:40 a.m.

Las Vegas-based National Airlines, still awaiting word on whether its $60 million federal loan guarantee will be approved, has reported to U.S. Bankruptcy Court that it lost $4.6 million in April.

The airline's bankruptcy reorganization plan would take effect if the Air Transportation Stabilization Board approves the loan guarantee National applied for last month.

Under new contracts that are a part of the reorganization plan, National would have lost just $116,355 in April, the airline told the bankruptcy court. The $4.5 million difference between what the airline reported losing and what it would have lost under the revised contracts illustrates how important the loan guarantee is to National.

"The airline industry as a whole is still hemorrhaging from the effects of the tragedy of 9-11 and National is doing better than most carriers in the United States," said airline spokesman Dik Shimizu.

"It's a clear sign that leisure travel is rebounding faster than business traffic, something that other airlines are much more dependent on than us," he said.

So far, only one airline -- National rival America West Airlines -- has been approved for a loan guarantee. Two other companies, Vanguard Airlines and Frontier Flying Service, a small Alaska carrier, had their loan guarantee applications rejected by the ATSB after National applied. In both cases, the board said the rejection occurred because the board did not have confidence that the airlines could repay their loans.

National officials maintain that their loan guarantee will be approved because they believe they have a better application than the one approved for America West. The company hopes to get a response from the board by the end of the month.

Besides National, four other airlines have loan guarantee applications pending before the board and other companies have indicated they plan to file by the June 28 deadline. The government program, established in October, provides $10 billion in loan guarantees for airlines affected by Sept. 11 terrorist attacks.

National, operating under Chapter 11 bankruptcy protection since December 2000, is required to file financial operations reports with the Bankruptcy Court each month. In April, the company reported $22.8 million in passenger and charter revenues and $26.6 million in expenses. Among the expenses are $5.5 million in aircraft lease costs.

Under new lease agreements within the reorganization plan, aircraft leases would have reduced the loss by $2.2 million. Other new contracts and write-offs built into the reorganization plan and legal fees associated with the bankruptcy would reduce the loss even further.

In addition to the April report, National filed a revised statement of operations reflecting earnings for March based on contracts in the reorganization plan. In that month, National reported a loss of $3.5 million, but under the revised contracts would have reported a profit of $733,196, the company said.

National said its last profitable month was August 2000 when fuel prices spiked upward, contributing to the losses that led to the airline's Chapter 11 filing four months later.

The airline has not had a profitable month through the bankruptcy. However, if the same accounting adjustments with the revised contracts would have been applied, National would have been profitable between March and August 2001, an airline official said.

National officials have said their chances of profitability would increase with the addition of flights. The airline added three flights to Seattle and one to Dallas in May and has service expansions to Washington D.C. and Reno planned later this year.

Shimizu said National has had higher-than-expected bookings for its Seattle route and that the increased capacity has given it a higher passenger count this year over last year. However, the overall load factor -- the percentage of seats filled by paying customers -- is down slightly from last year. The company did not release specific figures.

National presently has the third-highest number of flights at McCarran International Airport with an average of 34 a day and the third-highest total number of seats in and out of McCarran behind Southwest and America West airlines.