Ramon Lopez/WASHINGTON DC
US business carrier Legend Airlines, which ceased flying in December, plans to resume operations this month after receiving a $20 million cash injection from new investors. Another struggling US carrier, low fares specialist Vanguard Airlines, has also received a cash boost, including $7 million from aircraft lessor Pegasus Aviation.
New York-based Legend Funding Group will invest $20 million in the Dallas Love Field-based airline as long as a federal bankruptcy court protects the cash from creditors, giving it a 35% stake in the carrier. Staff will own 21% with the rest controlled by creditors.
John Pincavage, who assembled the investor group, says the airline's new strategy will be in place by April, by which point Legend should be breaking even again. He adds that Legend will retain its all-business class product, and insists "there is a place for this type of service" in the US market.
Legend aims to resume operations later this month, with flights to Washington Dulles and New York LaGuardia. Services to Los Angeles and Las Vegas remain suspended, but those to San Jose should resume by mid-year.
Legend's seven 56-seat McDonnell Douglas DC-9-30s remain airworthy, having been used for charter work during the shutdown, which the airline blamed on a cash-flow crisis stemming from the accumulated effects of high fuel prices, high start-up costs and legal fees associated with its protracted battle to launch from Love Field.
Meanwhile, Vanguard, which has struggled since its launch in 1994, has received a cash injection totalling $14.5 million - $7 million from Pegasus and $7.5 from two private investors who retain control of the Kansas City, Missouri-based carrier.
The Pegasus cash includes $3 million for the purchase of preferred stock, giving it an 8% stake, with affiliate International Aero Components providing $3 million secured against present aircraft spare parts, plus an additional $1 million for future parts purchases. The investment is part of a strategic deal which will see Vanguard take six Boeing MD-80s (and options on two more) from the lessor, plus two spare Pratt & Whitney JT8D-219 powerplants.
The MD-80s will complement Vanguard's 13-strong Boeing 737 fleet, providing "the optimal interim solution" for improved reliability and growth, says the airline's new president and chief executive Jeff Potter. The 737s will be retained until the end of this year at least.
Vanguard took a $4.7 million net loss in the third quarter of last year, blaming stiff competition from Southwest Airlines and high operating costs.
Source: Flight International
