National Airlines hopes to sell federal flying permit

Friday, Nov. 15, 2002 | 11:48 a.m.

By KEN RITTER

Associated Press Writer

LAS VEGAS- Lawyers for National Airlines hope to sell the bankrupt carrier's federal flying permit, while ex-employees said Friday they're hoping to land jobs with a new owner.

"We hope someone buys it and hires people back," said Charles Chambers, 44, an aircraft mechanic who was dismissed when the Las Vegas-based airline quit operating Nov. 6.

"That would be great," he said outside U.S. Bankruptcy Court in Las Vegas. "But we can't hold our breath."

About two dozen former employees and 25 lawyers for creditors heard National Airlines lawyer Craig Hansen tell Judge Linda Riegle that the airline shut down with $196,000 in cash on hand and one main asset - its Federal Aviation Administration operating certificate.

Its fleet of 18 leased Boeing 757 jets has been repossessed.

The airline began service in May 1999 and flew to Chicago, Dallas, Los Angeles, Miami, Newark, N.J., New York, Philadelphia, Reno, San Francisco, Seattle and Washington D.C.

National flew about 260,000 passengers a month to Las Vegas, but it grounded its fleet when it couldn't secure financing to emerge from bankruptcy protection.

Hansen said there have been talks with a potential buyer for the flying permit, plus the National name and operating and repair manuals that could help start a new airline. Hansen did not specify a price or name the possible buyer.

A Department of Justice lawyer participating for the FAA by conference call from Washington, D.C., warned Hansen that federal rules may govern whether National can sell the permit.

Hansen said in a brief interview that there was no guarantee a new owner would rehire any of National's 1,500 former workers.

Riegle stopped a discussion between lawyers in her courtroom and on conference call from New York, Dallas, Philadelphia and San Francisco about where further bankruptcy and liquidation hearings should be held.

"I don't want to hear a town meeting about who did what to whom," the judge said.

She instructed the parties to meet to decide how - and where - they will divvy up the airline's assets. Meanwhile, she scheduled another hearing in Las Vegas on Jan. 6.

Riegle has presided over National's bankruptcy since the airline filed for Chapter 11 protection in December 2000. She said she agonized over whether to require the airline to give passengers and employees notice when she learned Nov. 6 that it would cease operations.

"You can't shut down an airline in a terribly orderly way," Hansen said, maintaining that aircraft lease holders, fuel suppliers, credit card companies and airports would have stopped National from operating once notice was issued.

The airline lawyer said most passengers could obtain refunds from their credit card companies for tickets they booked that way. He said travelers bought tickets on National "with well-publicized risks of whether National was going to make it or not."

He said agreements have been reached to pay passenger facility charges collected by the airline but due the airports in most of the 12 cities National served. Negotiations about the charges were continuing with airports in Philadelphia and San Francisco, Hansen said.

Kevin Tourek, National Airlines general counsel, said a company Internet Web page that was shut down would be reactivated once computer servers were moved and reconnected.

Airline lawyers said employees lost accrued vacation time and health benefits when they were dismissed, and were not eligible for post-job health insurance through the federal Consolidated Omnibus Budget Reconciliation Act of 1986.

"The blunt and harsh reality is ... there are no COBRA rights if an employer ceases to exist," Hansen said.

National's employees were not unionized, and some of the flight attendants, ramp hands, mechanics and pilots who attended the hearing said they were sad to be grounded.

"We hope for a buyer so we can resurrect our careers," said Scott Schmidt, 36, a lead flight attendant. "These are good people and we stuck by our airline."

Others took the job loss in stride.

"This airline was number nine for me," said Steve Levine, 43, a flight controller who moved to Las Vegas to work for National. "I've thought at times about getting out of this industry. But we're all gypsies in a respect."