After landing $112 million in financing last week, National
Airlines is poised to fly out of Chapter 11 bankruptcy.
“This financial package displays the support the private sector
has shown for our business plan, and their recognition of the
evolution of the airline industry toward efficient, low-fare
carriers,” said National CEO Michael Conway.
“It’s the kind of support the Air Transportation Stabilization
Board did not display when it recently rejected National’s
application for a federal loan guarantee.
“National spokesman Dik Shimizu declined to say who put up the
money to save National. “I’m not in a position to discuss the
breakdown [of financial participation], nor can I reveal who is
participating in this package,” he said. Las Vegas casinos benefit
significantly from the lift National provides to the city,
especially from the East Coast. During Chapter 11 reorganization,
Harrah’s Entertainment one of National’s key creditors has
continued to show support for the carrier.
“The reorganization does not come without consequences for
National employees. Conway said company workers “will continue [to
incur pay reductions] for varying lengths and amounts, with the
most significant burden borne by the management and pilot
“The company hopes new cash and employee concessions will
convince travel agents who have been reluctant to book a Chapter 11
carrier to punch in the N7 code next time their clients are Vegas
““That concern should no longer exist,” said Shimizu, who added
he didn’t know how many agents were booking away from National
because of its Chapter 11 status.
“Despite the fact that the airline continues to offer 10%
uncapped commissions, the percentage of its bookings derived
through the travel agency community has slipped since last
“While National is confident the $112 million package will
eventually free it from Chapter 11 constraints, one aviation
consultant is cautious.
““The usual caveats apply,” said Jack Keady, a Marina del Rey,
Calif.-based industry observer. “Traffic to Las Vegas is highly
competitive and very low-yield.” Because LAS is the quintessential
leisure market, the amount of money generated by each seat flown to
the city yields less revenue than, say, a business route such as
““National Airlines has always staked its whole being on having
costs lower than their revenues which is a very, very difficult
thing” to accomplish, Keady said.
“Conway appears confident his company can pull it off. The new
financial package exchanges debt for equity, substantially reducing
the carrier’s debt load. N7 hopes to successfully emerge from
Chapter 11 in October, pending final documentation, modification of
the company’s previously confirmed plan of reorganization and court
National Airlines will drop twice-daily Las Vegas-Chicago Midway
service Oct. 1, while retaining a quartet of daily departures to
The problem: A shortage of airplanes. Because N7 wants to start
LAS-Reno service Oct. 3, it had to reallocate its limited fleet of
Boeing 757s, said spokesman Dik Shimizu.