Chris Jasper/LAS VEGAS
US start-up National Airlines plans a share placement and initial public offering (IPO) which could see its capital base grow from $60 million to $300 million. Part of the cash will be used to fund a major route and fleet expansion programme.
Las Vegas-based National, a Boeing 757 operator which launched in May last year, is 47% owned by the Harrah's casino and hotel chain, with a mixture of small investors and staff - plus Wexford Management, owner of US Airways Express operator Chautauqua Airlines - controlling the rest.
The private placement, planned for the third or fourth quarter, will see 5 million shares sold at $7 each to a small number of US and foreign investors, raising $35 million. National currently has a base of 12 million shares, valued at $5 each.
An IPO is expected to follow in the first half of 2001, with 7-10 million shares sold at $15-20 each, raising a possible $200 million. National chairman and chief executive Michael Conway says the offering should prove popular, given that the airline achieved profitability before it was a year old.
After suffering what he calls a "disappointing" period around the turn of the year, when millennium traffic to Las Vegas was lower than expected, National has been profitable since February, and expects to show its first quarterly net profit in the three months to the end of June. Long sectors (averaging 1,930km (1,045nm) versus the 480km typical of rival Southwest) and high aircraft utilisation (13h-plus) mean it is able to turn a profit on its "full service, low fare" product.
Some of the funds raised will be used to pay off launch debts, and some will help expand the airline. National's network covers Chicago Midway, Dallas/Fort Worth, Los Angeles, Miami, New York Kennedy and San Francisco. Service to New York Newark begins on 13 July, while the airline will operate to Chicago O'Hare from the third quarter, having recently secured slots. It also hopes to launch flights to Washington National by year-end.
Further expansion detailed in a five-year launch plan should add 11 US cities, while international targets are Toronto, Montreal, Vancouver and Mexico City. Conway says the expansion plan is justified given Las Vegas' status as the USA's fastest-growing city.
National will have a fleet of 15 Boeing 757-200s by the end of this month, rising to 18 by year-end. Conway expects to add another 10 aircraft a year thereafter up to a total of at least 40.
Source: Flight International
