Legend, the Dallas-based airline that sought to carve out a business-traveller oriented niche, suspended services at the start of December, after operating for just eight months, and filed for bankruptcy court protection the next day. Airline officials said they intended to restart services after securing the necessary financing.
Legend started scheduled services in April after winning a protracted legal battle to operate from Dallas Love Field, close to downtown Dallas. The carrier used McDonnell Douglas DC-9s configured to carry 56 passengers in first-class seating, and operated from a new executive terminal at the restricted airport.
T Allan McArtor, Legend's president, cited non-recurring start-up costs, three years of legal fees and the dramatic increase in the price of fuel as causes for the airline's woes. In a November filing with the US Department of Transportation, Legend said it had lost $25.6 million in the half year to September, and that its cash reserves were dwindling. It also had incurred about $21 million in start-up costs.
"We believed we had secured additional funding, and when the funds were not made available, our only alternative was to suspend operations temporarily until those funds could be secured," says McArtor. He noted that the carrier's operating costs were "in line or lower" than industry benchmarks for the type of aircraft being used. Others said the airline's loads and revenues were exceeding targets laid out in its business plan.
Legend, which won plaudits from travellers for its services, operated seven DC-9s on flights from Dallas to Las Vegas, Los Angeles, New York and Washington. It listed assets of $87 million and liabilities of $85 million in its filing with the US Bankruptcy Court in Texas.
National, the Las Vegas-based carrier backed in part by its hometown's hotel and casino operators, filed for bankruptcy court protection from creditors on 6 December, but said it had adequate financial resources to continue operating its normal schedule during its financial restructuring. The airline currently operates 16 Boeing 757s to nine cities from Las Vegas. It has carried more than two million passengers since its start-up in May 1999. National is reviewing its eight 757 orders with the manufacturer and lessor GECAS in light of its bankruptcy filing.
The airline, which has gained a loyal following, blamed its financial difficulties on escalating fuel prices: "We believe that our financial situation is a short-term issue that can be successfully managed through the re-organisation process," says Michael Conway, Nation-al's president.
Noting that National has unit costs which are "lower than any other major US airline," Conway adds: "The fact of the matter is that the more established airlines have deeper pockets that help them to withstand these kinds of fuel prices."
Source: Airline Business
