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Braniff Reroutes Stranded Passengers, Vows to Rebuild

September 28, 1989

MIAMI (AP) _ Braniff Inc. on Thursday became the first major airline to seek bankruptcy protection twice, a day after canceling nearly all its flights and laying off more than half its work force.

Some airline experts say losses of more than $1 million a week and intense competition from larger carriers may keep Braniff from re-enacting its comeback from Chapter 11 bankruptcy protection in 1984 as a smaller company.

Braniff left thousands of travelers to seek alternate flights and ticket refunds Thursday after halting all but four flights linking its Kansas City, Mo., hub with Dallas and Orlando, Fla., its home base.

Braniff spokesman Don McGuire in Orlando said the carrier hopes to restore 40 of its 256 normal daily flights by Monday.

Meanwhile, plans are under way to cut Braniff’s work force from 4,791 to about 2,000. The work force currently includes an estimated 2,000 employees in Kansas City, 1,165 in Orlando and 450 in Dallas.

The company said it plans to dismiss 556 pilots, 656 flight attendants, 163 mechanics, 1,167 station personnel and agents, 22 dispatchers and 200 salaried personnel.

Braniff sought protection from creditors to allow it to reorganize under Chapter 11 of the U.S. Bankruptcy Code at about 2 a.m. EDT in Orlando, where the carrier relocated its headquarters from Dallas in May. Braniff, sold last year to a group of investors led by PaineWebber Inc., lost $31.8 million on revenue of $293 million in the first six months of the year.

William McGee, president and chief executive officer of Braniff, said the financial problems were caused by Braniff’s relocation to Orlando and its $2 billion order for 50 Airbus A320 aircraft.

The company recently was unable to complete a $75 million financing deal, said spokesman McGuire.

McGee said Braniff will not cancel its Airbus order and will retain its options for 50 more. Last May, he announced plans to expand the work force by 35 percent and build new maintenance facilities in Orlando and Kansas City.

Now the airline says it is reducing the number of cities it serves from 36 to 11: San Diego, Los Angeles, San Francisco, Phoenix, Dallas, Chicago, Kansas City, Orlando, New York (La Guardia), Newark, N.J., and Washington, D.C. (National).

Braniff extended the expiration date of issued tickets until Sept. 27, 1990. Continental Airlines and Eastern Airlines, both subsidiaries of Texas Air Corp., said they will honor most Braniff tickets.

″Braniff’s filing for bankruptcy is a particularly disappointing blow to the airline’s 900 pilots,″ said Capt. Dick Goduti, vice president of the Braniff pilots.

″With a new cost-competitive contract and what appeared to be a sound commitment to progress from our management, we anticipated an era of stability, security and growth. ... We’ve been down this rocky road before.″

At Orlando International Airport, Margie Tomlin found out about the canceled flights as she tried to get home to Indiana.

″I just paid $179 to come down here. I think it’s outrageous,″ she said.

At the Dallas airport, hundreds of stranded passengers were being placed on competitors’ flights.

The Braniff move comes while other debt-burdened carriers face buyout offers and federal officials worry about the financial state of the nation’s airline industry.

Recently NWA Inc., the parent of Northwest Airlines, accepted a $3.65 billion buyout offer from Los Angeles investor Alfred Checchi. Also, a team of UAL Corp. pilots and top managers, allied with British Airways PLC, have put together a $6.75 billion offer for UAL, parent of United Airlines.

Braniff tried to use the Kansas City hub to capitalize on the void left by strikebound Eastern, which was losing millions of dollars a day before filing for Chapter 11 protection on March 9.

But the leaner and more aggressive airline industry - including frequent- flier programs, massive computer reservation networks and elaborate marketing campaigns - is a much tougher environment for Braniff’s second comeback attempt, analysts say.

″I just don’t see how Braniff can keep up with the real big carriers,″ said Nicholas Glaskowsky, an airline industry expert at the University of Miami. ″They gave it a shot and just couldn’t make the money needed to survive. I don’t see any real possibility of Braniff coming back from this.″

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