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Aviation History
1997
1997 - 3303.PDF
Frontier bids for WestPac... GRAHAM WARWICK/WASHINGTON DC AUS BANKRUPTCY-court judge will make a decision on 3 December between rival bids for Western Pacific Airlines. Frontier Airlines, which called off plans to merge with WestPac earli er this year, has switched tack and is bidding to take over its bankrupt would-be partner. WestPac itself is supporting a rival offer from invest ment firm Smith Management. Both offers are worth an initial $10 million - the sum required to meet overdue lease payments on WestPac's 18 Boeing 737s. Pay ment is required by 4 December, or lessors could start repossessing some or all of the aircraft. Frontier has joined investment firm Wexford Management in its bid, which would involve the air line taking over WestPac's assets and absorbing ten aircraft into its fleet. The remaining aircraft would be sub-leased. Frontier had earlier secured a Si 5 million loan from Wexford to lease additional 737-300s to help expand its main Denver hub and add to working capital. Part of that cash will finance the takeover bid, with $10 million earmarked to buy the leases on WestPac's aircraft. Under the Smith bid, the invest ment firm would provide up to $50 million to bring WestPac out of Chapter 11 bankruptcy protection. WestPac was finally forced to file for bankruptcy on 6 October after IVestPac could be beaded for Frontier, itsformer partner turned hostile bidder Frontier bowed to mounting pres sure to pull out of their merger. Both bids have received support from WestPac's unsecured-credi tors committee, which includes the airline's maintenance contractor, BFGoodrich, and fuel supplier Mercury Air Group. Under the Wexford bid, creditors would reportedly receive a 10% stake in the enlarged Frontier Airlines. Wexford is entitled to take up to 3 million Frontier shares as part of the existing refinancing deal. • .. .as Shugrue is eased out as Pan Am chief PAN AMERICAN World Airways has eased out its co- founder and chief executive, Martin Shugrue, to be replaced by airline veteran David Banmiller, who is charged with turning around the start-up's heavy losses and seeing through the merger of operations with Carnival Air Lines. Pan Am confirms that Shugrue has stepped down to serve in a newly created non-executive posi tion as board vice-chairman. He will hand over responsibilities to Banmiller, who has held a series of posts in the US airline industry, including stints at Trans World Airlines and American Airlines. The management shift comes as Pan Am posted further heavy loss es for the third quarter to the end of September. The airline suffered a net loss of $21 million on revenues of $37 million, bringing the total losses for the first nine months of the year to $53 million. The airline, which began opera tions in September 1996, is still confident that it can hit the target of an operating profit in the final quarter of this year. The latest results include a charge of $4.8 mil lion relating to the removal of most of Pan Am's fleet of six Airbus A3 00s in favour of smaller Boeing 737s. Pan Am, which has signed a letter of intent to lease three 737-300s from Air Alaska, says that the last A3 00 is due to leave its fleet in 1998. Including Carnival Air Lines, the acquisition of which was approved at the end of September, the airline has a combined fleet of 21 aircraft and an expanded route network covering 17 destinations. The acquisition gave Carnival's billionaire owner Micky Arinson a 42% stake in Pan Am, and industry sources say that it was pressure from him to find a new leader that led to Shugrue's replacement. • NEWS IN BRIEF • BOEING/CSA TEAM Boeing and CSA Czech Air lines have formed a joint- venture company in Prague to acquire a stake in Aero Vodochody. Owned 90% by Boeing and 10% by CSA, the venture will invest CKr950 million ($30 million) to acquire 34-40% of Aero. Boeing is co-operating with Aero on development of its L-159 light combat aircraft. • SABENA OPTIMISTIC Sabena president Paul Reut- linger believes that the air line's 1997 financial results will be better than the pre dicted BFrl.5 billion ($43 million) loss after a strong traffic performance during the first ten months of the year. Passenger numbers have grown by one-third and load factors on the core European network are up by ten points, to 59%. The air line was hit by strike action in 1996 and posted a record BFr9 billion deficit. Reut- linger says that the airline should be safely on target to break even in 1998. • KITTY HAWK REFINANCES Fresh from its merger with the Kallita air-freight group ing, US cargo carrier Kitty Hawk has completed its refi nancing, netting $39.5 mil lion from a share offering and another $340 million through a bond issue. The cash will be used to fund the merger, which the carrier says makes it the world's seventh-largest dedicated cargo airline. • FINE AIR GAINS CREDIT US cargo airline Fine Air Services has opened a $32.5 million line of credit to help finance expansion in South America, also raising the prospect of it exercising an option to acquire a leased Lockheed L-1011 freighter. Fine Air cancelled a public offering in August after one of its McDonnell Douglas DC-8s crashed at Miami. FLIGHT INTERNATIONAL 3 - 9 December 1997 15
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