Western Pacific Airlines confirmed the perilous state of the US low-cost carrier market with a filing for Chapter 11 bankruptcy protection on 6 October.
The latest failure comes just weeks after the bankruptcy of Air South and follows a round of heavy losses throughout the low-cost sector, which are being blamed on stiff price competition from the major airlines.
West Pac had been forced to terminate plans to acquire Frontier Airlines at the end of September, citing "cultural differences" and the time taken to seal the merger. The deal had also run into vocal opposition from among supporters of Frontier in Denver.
The crisis mounted on 4 October with the resignation of four West Pac board members, representing the airline's major backers, and the company was forced to file for Chapter 11 on the following Monday.
West Pac president Bob Peiser, who came in to head the airline in December, says that the airline "-simply has not had enough time "to perform a turnaround, but still plans to re-emerge from bankruptcy.
He adds that the airline is looking at the possibility of legal action over the resignations by board members, three of whom were associated with companies which recently loaned $10 million to the airline.
West Pac has been through dramatic growth since its launch in April 1995, growing to a current fleet of 19 Boeing 737-300s and providing services to 17 cities from its base in Colorado Springs. At the same time its financial situation continued to worsen, with net losses for the first half of this year climbing to $36 million. At the half-year mark, the carrier's free cash had shrunk to little over $6 million, while long-term debts still stood at nearly $15 million.
Financial analysts believe that the airline needed cash from the smaller but more stable Frontier to stay afloat.
Piesner is looking to at possible new codeshare partners and does not discount a merger attempt with another carrier. He says that the shift of flights to Denver International Airport will continue despite likely stiff competition from United Airlines and Frontier.
Source: Flight International
