World Airways has reported a second quarter of heavy losses amid continuing concern among investors over the viability of parent company WorldCorp.
Second quarter net losses of $3.2 million were only slightly worse than those for the previous period, but they amounted together to a $6.2 million loss for the six months. This is a setback from the first six months of 1997, when net profits were $6 million.
Russell Ray, World's new chairman and chief executive, blamed the disappointing results on lower than expected utilisation of its aircraft. The airline hopes to resolve this problem soon, when it announces a new agreement with a major international carrier.
World, a charter and wet-lease specialist, suffered when an unnamed Florida cargo company failed to lease a Boeing MD-11 as expected and did not use fully a leased McDonnell Douglas DC-10. At the same time, the Brazilian Government blocked an MD-11 wet-lease agreement with VASP.
World has recently received business from Aer Lingus, El Al and Monarch, and won an $86 million charter contract from the US Air Force. Investors have questioned WorldCorp's financial health, but Ray says that it has $9 million available in cash. "We therefore believe that concern for our economic stability is unwarranted," he adds.
Earlier this year, WorldCorp came close to bankruptcy when it failed to make a multi-million dollar interest payment on junk bonds. At about the same time, T Coleman Andrews resigned as chairman of World Airways to become head of South African Airways. Ray, formerly at Pacific Southwest Airlines and Pan American World Airways, took over.
Source: Flight International