Big loss in September was deadly for National

Monday, Nov. 18, 2002 | 11:04 a.m.

Most airlines suffer a downturn every September following the heavily traveled summer months.

For National Airlines, the decline in business combined with its longstanding financial problems proved to be lethal, according to financial reports filed in U.S. Bankruptcy Court.

Las Vegas-based National, which ceased operations Nov. 6, reported a loss of $3.9 million in September, according to a monthly operating report filed just before the shutdown. August was the company's first profitable month in a year.

The company reported revenue of $22.6 million and expenses of $31.1 million in September. A $5 million adjustment for revised contracts the company had renegotiated as part of its reorganization plan left National with one of its steepest monthly losses since the company filed for Chapter 11 bankruptcy protection in December 2000.

The company fell below the amount of cash on hand it needed to meet its $4.5 million monthly payroll and the board of directors voted to close the airline's doors.

Left behind are 1,500 employees out of work, some of which have had their health insurance canceled at critical junctures.

Some employees attended Friday's hearing in Judge Linda Riegle's courtroom -- a date that at one time may have been considered for approval of a reorganization plan.

But late last month, attorneys for National said one of its investors -- an aircraft lessor that was contemplating adding to National's fleet of Boeing 757 jets -- pulled out of the deal, leaving a $2 million hole in the company's $112 million refinancing package.

In Friday's hearing, National attorney Craig Hansen explained the shutdown plan and how the Chapter 11 bankruptcy would likely be converted to Chapter 7 -- the liquidation of assets to pay creditors a fraction of what they're owed.

Among the assets likely to be sold are the airline's Federal Aviation Administration operating license the company received in 1999 when National began flying between Las Vegas and two other cities. When the airline ceased operations, it was serving 12 cities and had become the No. 4 carrier at McCarran International Airport by passengers served.

National's last financial filing said it owed $81.6 million in unsecured claims and had post-petition liabilities of $181.2 million. The company's balance sheet says it has assets of $81.2 million, including $15.8 million in property and equipment, $45.1 million in security deposits and maintenance reserves and $20.3 million in other cash and credit equivalents, including accounts receivable.