Las Vegas Sun

March 28, 2024

ATSB lack of response frustrates National CEO

It's been three months since Las Vegas-based National Airlines submitted its application for a federal loan guarantee to the Air Transportation Stabilization Board.

When the airline -- currently the No. 4 carrier at McCarran International Airline by number of passengers served -- applied for the loan guarantee May 3, there were expectations that the company would get an answer within a few weeks.

But that answer still hasn't come. So far, only America West Airlines has been approved for a loan and USAirways has been conditionally approved. Two carriers -- Frontier Flying Service Inc. of Alaska and Vanguard Airlines -- have been rejected.

Vanguard filed for Chapter 11 bankruptcy protection this week and canceled all its flights, including two a day between Las Vegas and Kansas City. The ATSB said Vanguard's application was rejected because the board didn't believe the airline would be capable of paying back the loan. Vanguard has never shown an annual profit in eight years of operation.

A few days before kicking off service to Dulles International Airport near Washington D.C., National Airlines Chief Executive Mike Conway issued a statement pointing out the ATSB has helped two major airlines, but none of the smaller companies that have applied.

"To date, the Air Transportation Stabilization Board has approved only one application, America West in January, and has given only one conditional approval, US Airways in July," he said. "Both of these carriers are large, major airlines that by their own admission, faced grave financial consequences absent support from the ATSB,"

Conway said size shouldn't be a factor in determining loan eligibility.

"From our vantage point, we understand the merits on which these large carriers with thousands of employees are being given a chance to get back to profitability," he said. "However, size should not be the dominant criteria. A profound dynamic is under way in our industry that is being led by efficient, low-fare carriers that are responding to today's more discerning travelers.

"Many of these low-fare carriers are small and new, and we believe the pricing discipline they bring to the market shoud not be overlooked. It is now more important than ever that the playing field not be biased."

A spokeswoman for Rep. Jim Gibbons, R-Nev., said the congressman is investigating Conway's concern about large airlines getting spedier treatment.

"It's something that we're definitely looking at," said Amy Spanbauer, a spokeswoman for Gibbons, who worked as a commercial airline pilot for Western and Delta for 17 years.

"But you have to consider that this is a brand new office that was created after Sept. 11 and they've had to create their procedures from scratch," Spanbauer said. "But certainly the smaller airlines should have the same access to this board as the large ones."

National's last profitable month was August 2000. However, the company renegotiated supplier contracts and agreements with aircraft lessors as part of its bankruptcy reorganization process and had the plan been in effect, it would have enabled National to show a profit between March and August 2001. Since last August, the airline has either shown a loss or operated at break-even levels.

National's $60 million loan guarantee is important because the company's bankruptcy reorganization plan is contingent upon its approval. National already has had to alter some of its scheduling plans because it hasn't received an answer from the ATSB.

In mid-July, National announced it was delaying its return of service to Ronald Reagan National Airport in central Washington D.C. Airline officials said an aircraft lessor would not deliver a twin-engine Boeing 757 jet National needed to start the service to Reagan National until the loan guarantee was approved. The airline will now start service to Reagan National on Oct. 2.

On Thursday National had a special ceremony at McCarran prior to the airline's first departure to Dulles. Conway was joined by Rep. Shelley Berkley, D-Nev., and representatives of the rest of Nevada's congressional delegation.

The first flight, part of National's twice-daily service to Dulles from Las Vegas, carried a painting, "Land of the Brave," that was to be presented to the Disabled American Veterans for display in the organization's Washington visitors center.

archive