Pride Air Files For Bankruptcy
NEW ORLEANS (AP) _ Pride Air, the four-month-old airline that grounded its planes a week before Thanksgiving, filed for reorganization under federal bankruptcy laws Monday.
But an airline spokesman said a financial bailout may still come through, and that Pride planes could be back in the air by Christmas.
The Chapter 11 filing was made shortly before noon, after Pride’s Board of Directors voted on Nov. 27 to make the move ″as soon as practicable.″
″It was a legal action that we had to take at this point in time in order to protect our primary investments and get back in the air,″ Pride spokesman Kiv Kiviranna said.
″We’re still optimistic ... right now we’re targeting getting off the ground by the Christmas holidays.″
A clerk at New Orleans’ Florida Express ticket counter said the Pride counter was vacant Monday, as it has been since the planes were grounded in mid-November.
The airline’s business number was answered by a telephone company recording stating that the telephone had been temporarily disconnected, and Pride’s toll-free ticket reservation number was answered by the same type of recording.
Under federal requirements, Pride will have 120 days to file a plan for reorganization. Kiviranna said that will give the airline plenty of time to secure a financial aid package.
″Events over the Thanksgiving holidays indicate that we may be close to a solution,″ he said.
In the meantime, Kiviranna is advising Pride ticketholders not to cancel their flight plans.
″The best thing for ticketholders to do is hold on to their tickets and see what the next couple of days bring,″ Kiviranna said. ″This may well be the shortest reorganization in history.″
Pride opened its headquarters four months ago in New Orleans and filed its first public stock offering in September. Last week, officials estimated that Pride owed about $2.5 million in overdue bills. The bankruptcy filing did not include an estimate of Pride’s current debts.
The airline failed to meet its payroll and stopped its 44 daily flights Nov. 22, the Friday before Thanksgiving, and laid off its 566 employees four days later.
Pride officials were trying to put together a $50 million rescue package when they suspended flights.
The suspension left about 2,000 ticketholders in a lurch daily, and about 3,000 to 3,200 each day during the holidays - for a loss of about $400,000 a day.
In exhibits filed with Pride’s bankruptcy papers, the airline listed more than 800 creditors, including businesses, pilots, and individuals who apparently have bought tickets.
A spokesman for American Airlines in Dallas said American stopped honoring Pride tickets Nov. 23 because the airline had not met its obligations to to the company.
Pride officials said last week that the airline had about $2.5 million in overdue bills and the First National Bank of Commerce - the airline’s local bank - had frozen $200,000 in its accounts.
The airline is run by Paul R. Eckel, a one-time chief pilot at Texas-based Continental, which filed for bankruptcy protection more than two years ago and slashed wages by 50 percent to cut costs and resumed flying three days later.
Continental’s employees went on strike Oct. 1, 1983, and many later joined Eckel in forming Pride, largely with a $15 million investment from pension funds they got from Continental, which is now making a profit.
Pride operated eight Boeing 727 jetliners out of its New Orleans hub, with service to Los Angeles; San Francisco; San Diego, San Jose and Sacramento,Calif., Las Vegas; Denver; Salt Lake City; Miami; Fort Lauderdale, Orlando, Tampa, Jacksonville, West Palm Beach and Sarasota, Fla.
In the midst of the effort to put together a financing package, Pride’s president and co-founder, Barrie Duggan, resigned. Chief Financial Officer John Dvorak also resigned and was replaced by Richard Sklar of Tulsa, Okla., one of the leaders of the rescue effort.