Las Vegas airline closes in bankruptcy
By Adam Goldman
LAS VEGAS National Airlines, which flew tourists to the nation's gambling capital, said it ceased operations yesterday after nearly two years in bankruptcy court.
A $2 million financing deal that would have kept the carrier flying fell apart last month.
"We kept fighting and a lot of people kept working with us," National spokesman Dik Shimizu said. "But the airline industry is still hemorrhaging red ink and, obviously, it's not an easy task to attract new capital."
The Las-Vegas-based airline began service in May 1999, billing itself as a hometown carrier that would deliver tourists to its Las Vegas hub. National flew to a dozen cities with a fleet of 18 leased Boeing 757s.
National filed for bankruptcy in December 2000. It was unable to develop its reorganization plan after the Air Transportation Stabilization Board in August denied its request for a federal loan guarantee.
National said it will offer no refunds on tickets, and was telling customers to contact their credit-card companies. The company's Web site also was shut down.
America West Airlines and Frontier Airlines said they would accept National passengers' tickets on a standby basis for flights on the same day as the original ticket and to the same cities, for a small processing fee.
National had 1,500 employees and flew to Chicago, Dallas, Las Vegas, Los Angeles, Miami, Newark, New York, Philadelphia, Reno, San Francisco, Seattle and Washington, D.C.
A U.S. Bankruptcy Court judge in Las Vegas in September gave tentative approval to a $112 million financing package that would have included a $2 million letter of credit from an unnamed aircraft leasing company.
The credit would have served as collateral in a complicated loan agreement with Foothill Capital Corp., a subsidiary of Wells Fargo Bank.
Another hearing was scheduled for Nov. 15.
"We were very close to completing a successful reorganization on a few different occasions, only to have additional obstacles confront us at the last minute," said Michael Conway, National president and chief executive officer. "We were able to meet all these challengers successfully, until now."
Shimizu said an agreement could not be reached with companies willing to provide the money to keep the planes in the air.
"We were unable to close the final deal," he said. "We were working on that agreement and there were some stumbling blocks. Money was an issue."