Vanguard Airlines last week became the second US carrier to shut down this summer, after Midway Airlines' decision to ground itself at least until October. Vanguard had failed four times since the 11 September attacks to win US government loan guarantees.
Throughout its seven years of operations, Vanguard failed to post an annual profit as rival Southwest Airlines increased its services. Vanguard posted five profitable quarters from 1997 to 1999, but lost millions in 2000 and 2001. With a fleet of six Boeing 737s and seven MD-80s, Vanguard offered low fares on 17 routes and says its insurance premiums rose by 170% after 11 September. One creditor had threatened to put Vanguard into involuntary bankruptcy proceedings.
Vanguard will join Midway in bankruptcy protection, but Mid-way plans to resume services this year flying regional jets as a US Airways Express carrier. Midway had not sought a loan guarantee, but received $12.5 million in federal compensation payments to make up for losses during its grounding in September. Vanguard was granted $7 million compensation. Midway, also harmed by Southwest at its hub, originally sought bankruptcy protection last August.
Source: Flight International
