Vanguard is done

[Timebuilder]

While I often question the amount of money we send overseas to some questionable "friends", I strikes me that if Israel were not drawing the attention of the extremist Muslim world, that attention would be almost completly focused on US.

Maybe we can think of it as "insurance."

 

[Fly-By-Cable]

Just an observation...
On Wednsday morning, less then 24 hours form Vangard's announsment, AirTran added Kansas City to it's list of destinations.

 

[falcondriver]

I hope all the best to the pilots. I was laid off for 5 months. I feel your pain and hope you guys and gals get jobs quick.
Good Luck
Falcondriver

 

[CitationCapt]

Any news is better than no news

Read this in the KC Star this morning. Sad to see another pilot (and employee) group out on the streets. Perhaps this news will turn into something positive for them.

CC


Posted on Thu, Aug. 01, 2002

Judge approves Vanguard plan to seek financing
By RANDOLPH HEASTER and DAN MARGOLIES
The Kansas City Star

A federal bankruptcy judge on Wednesday approved Vanguard Airlines Inc.'s request to use about $450,000 over the next eight days in a desperate, last-ditch effort to return the carrier to the air.

About 80 core employees will continue working over the next week to seek financing that could save Vanguard, said Daniel Flanigan, a bankruptcy lawyer representing the Kansas City-based airline.

Also, U.S. Bankruptcy Judge Jerry Venters approved Vanguard's request that it be allowed to pay $150,000 in outstanding payroll checks held by employees before its bankruptcy filing.

Vanguard shut down operations and filed for Chapter 11 bankruptcy on Tuesday, citing assets of $39.7 million and debts of $95.9 million. The carrier laid off about 1,000 employees and left thousands of passengers stranded.

According to its annual filing with the Securities and Exchange Commission for 2001, the airline has accumulated losses of $133 million since beginning operations in December 1994.

Meanwhile, U.S. Sen. Jean Carnahan, a Missouri Democrat, introduced a bill Wednesday that could provide more aid to laid-off Vanguard employees if the airline is permanently grounded.

In a federal bankruptcy court hearing Wednesday, Flanigan said Vanguard had about $1 million in cash. Excluding the $150,000 for payroll checks issued before its bankruptcy filing, Vanguard was granted use of up to $450,000 during the period of trying to obtain new financing.

About $100,000 would be required for the financing efforts, according to Vanguard's pleading. The remainder would be used to pay the 80 employees that have remained with Vanguard.

Under the request, Flanigan said, those 80 employees would receive pay for the week before the bankruptcy filing, which most employees did not receive. In addition, they would be paid their normal salaries through Aug. 9 plus 15 percent.

Flanigan said the 80 employees had lost their health benefits along with the rest of the Vanguard work force.

"That 15 percent is partly to make up for the loss of health benefits, and also to induce them to come to work," said Flanigan, of Polsinelli Shalton & Welte.

Given Vanguard's dire financial condition, with an estimated liquidation value of only $4.2 million to $5.4 million, Flanigan said, using the cash collateral to try to save the airline would be worthwhile.

"The only people we believe that have a protected interest in the cash collateral are the majority owners," he said.

Investor William Hambrecht, J.F. Shea Co. and Pegasus Aviation Inc. own about 80 percent of Vanguard.

By offering prospective investors bankruptcy court protection and the "superpriority" lien status granted to postbankruptcy creditors, Vanguard said, it is "reasonable to hope that a financing source may emerge in time to save the airline."

"During the last year, Vanguard has experienced interest by investors, including investors who were interested in a debtor-in-possession lending scenario," David A. Rescino, Vanguard's chief financial officer, said in a bankruptcy court affidavit filed Wednesday.

"The filing for Chapter 11 in fact simplifies the process and adds certainty to an investor desiring to obtain ownership and control of the airline. Accordingly, the filing itself may stimulate renewed interest by potential investors."

Vanguard said its effort to obtain additional financing probably would not last longer than seven days. If the effort fails, Rescino said, Vanguard will pursue an orderly liquidation, which would spell the airline's formal demise.

In that case, Vanguard's remaining 80 employees would be reduced to 40, then to 12 by the end of August, and then to four by the end of September.

Rescino estimated that a liquidation would yield enough money to pay off secured creditors in full and unsecured creditors in part. Among the assets available for distribution, he said, would be $700,000 to $1 million in prepaid insurance; $1.5 million to $2 million in excise tax refunds on unused tickets; $700,000 to $1 million from the sale of office, computer and other equipment; $100,000 to $200,000 in fuel prepayments; $100,000 from the sale of fuel inventory; and $100,000 in accounts receivable.

Although at this late stage Vanguard's prospects appear dim, at least one local aviation lawyer said the airline's hope of attracting new investors was not entirely unreasonable.

"There's a lot of value in an air carrier certificate, in their leases and in their pilots," said the lawyer, Jim Cooling of Cooling & Herbers. "Whoever comes in and provides financing will be protected by the bankruptcy court, and the airline's debt will be virtually eliminated.

"So I think it's still possible that someone could step up."

But Vanguard executives acknowledge that obtaining new financing is a long shot, and aviation industry analysts have given Vanguard no chance to emerge from bankruptcy.

If Vanguard is grounded permanently, its more than 900 Kansas City area out-of-work employees most likely won't receive severance benefits, given the company's liquidation value.

"That would be up to the bankruptcy court," a Vanguard executive said earlier this week.

Carnahan's bill proposes that airline employees furloughed because of loan guarantee denials by the Air Transportation Stabilization Board be entitled to the same benefits provided to workers displaced by foreign competition.

The U.S. Labor Department's Trade Adjustment Assistance program provides for job search allowances, income support and job retraining assistance. In Carnahan's proposal, airline workers would have to be employed by the same carrier for at least six months of the airline's final year before a layoff or shutdown occurred.

Carnahan and other Missouri and Kansas politicians have criticized the stabilization board, contending that it was created after Sept. 11 to aid airlines in Vanguard's predicament.