Braniff’s Creditors Question Airline Officials
ORLANDO, Fla. (AP) _ Braniff Inc. is struggling along with 275 employees as a small charter carrier, the airline’s top executives say, but a favorable court ruling on aircraft purchases and leases may help it get some needed cash.
The future remains cloudy for the airline, Braniff officials told a group of disgruntled creditors Tuesday. Orlando-based Braniff filed for Chapter 11 bankruptcy protection on Sept. 28, its second such filing in seven years, and cancelled all its regularly scheduled flights earlier this month.
Howard McKinnon, Braniff’s chief operating officer, said the company has ″a number of alternate plans″ but lack of financing ″prevents us from having any meaningful discussion or planning.″
He and Chairman Bill McGee are still trying to interest investors or buyers in Braniff.
Meanwhile, a bankruptcy judge’s ruling this past weekend will work in favor of Braniff, allowing it to add to its physical assets - its aircraft fleet - with long-term lease and purchase agreements for 50 Airbus A320 jets, said company lawyer Howard T. Glassman.
U.S. Bankruptcy Judge C. Timothy Corcoran ruled last Saturday that Braniff’s contracts for the 50 airplanes with a number of aviation companies are valid, despite the bankruptcy proceedings. In addition, Braniff has an option to buy another 50 Airbuses.
Braniff considers those contracts ″the linchpin to enable the debtor to go forward,″ Glassman said, meaning that the airline can sublease the planes or sell the contracts. The agreements also make Braniff more attractive to potential buyers.
However, the carrier failed to come up with $3 million in lease payments for five Airbuses it has already received from GPA Group Ltd., and may have to return the jets.
GPA, an Irish leasing company, is expected to sue Braniff to get the five planes returned. Glassman said, however, that Braniff may appeal the ruling, hoping to extend the payment deadline by 60 days.
″But that’s a totally separate issue,″ he told reporters. ″If I lost the planes on the ground because we couldn’t pay the $3 million, that doesn’t impact the other 95 planes. The five are not critical, as much as we’d like to have them.″
What’s important, he said, is the overall ruling that the agreements are valid.
″All we want is to market this position and raise money based on these planes.″
Mark Osterberg, Braniff’s senior vice president for finance, said in response to questions from lawyers for creditors that the company had about $500,000 cash on hand and has current monthly expenses of about $1.7 million, including some $1 million in payroll for remaining employees. But this does not include hefty legal fees, the charter operations and other non-scheduled expenses, he said.
Osterberg also said the company pays $1 million in rental costs every month. Braniff anticipates some $3 million to $4 million in credit card fees and another $1.5 million from other sources in December, he said.