Attacks end firm's struggle to regain stability
| • | Isle cruise ships sail into ports, mothballs |
| • | Cruise ships carried aloha |
| • | Effects of bankruptcy filing |
By Michele Kayal
Advertiser Staff Writer
A little before 8 a.m. CDT Sept. 11, Phil Calian stood glued to a television just outside the entrance to his Chicago office, watching a plume of black smoke stream from World Trade Center No. 1. As he watched, the second plane crashed into tower No. 2.
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Calian had just come from his home and his wife, who was a week away from delivering twin boys, and his first thought was pretty much the same as everyone else in the country.
"Business just died," Phil Calian said.
"The first thought, because I spent a lot of time in New York, I lived in New York, was disbelief," he said. "At that point the focus was not on the business."
But it quickly shifted there, as a cold new reality dislodged disbelief and the U.S. economy began to spiral downward.
The chief executive officer of American Classic Voyages began strategizing with his top officers. How would this company, already strapped for cash and losing the confidence of Wall Street, navigate what amounted to a typhoon in waters that only recently had gained some calm?
"No one could have predicted Sept. 11," he said. "(The business) just died."
While the events of Sept. 11 rocked tourism companies worldwide, for American Classic the tragedy was almost epic in its timing and circumstances.
Just weeks earlier, the struggling provider of cruises on U.S. rivers and coasts, and the only company with exclusive rights to operate interisland cruises in Hawai'i, had begun to get its act together.
In June, it pleased investors by cutting administrative costs 20 percent. In August, the Independence and the Patriot, which had struggled with revenues, were finally full for the second half of the year. Group business for Hawai'i was up 60 percent for 2002, with profits up dramatically.
And in September — just days before the world came crashing down — the company pulled the final thorn from its side, inking an agreement with its Mississippi shipyard that would delay but save a threatened project for two new ships slated for Hawai'i.
"While we weren't in the land of milk and honey, we all felt we had turned the corner," Calian said. "We felt we had enough cash, and despite the sluggish economy our path was clear."
And then there was a boom. And the smoke. And the second plane.
And in the days and weeks that followed future bookings slipped by 50 percent. Cancellations rolled in, rising 30 percent more than normal. Vendors began squeezing the company, asking for deposits where they used to give credit, demanding payment up front when they used to give 60 days.
Travel insurance companies refused to cover passengers on American Classic cruises, and credit card companies stopped passing through deposits made on their cards.
Finally, bankruptcy was the only option. And when the company filed for Chapter 11 Friday, it came as a sad irony.
"Following Sept. 11 we had no choice but to take this action because our cash supply would not carry us through," Calian said.
Before Friday's filing, whispers that had subsided in the investment community suddenly rose again in volume, with some analysts declaring the end was near.
"I wasn't surprised, just disappointed," said Peter McMullin, an analyst with Ryan Beck in Miami. "I've never had one of the companies I follow file bankruptcy in 31 years. These were nice niches. One of our clients was on the Patriot and said it was unbelievable, a great experience. People I talk to on the river boats said it was a nice Americana kind of thing. The products they were representing deserve to be there. But we don't live in normal times."
Michele Kayal can be reached at mkayal@honoluluadvertiser.com.
