Braniff Executives Answer Creditors
ORLANDO, Fla. (AP) _ Executives of Braniff Inc. told a roomful of disgruntled creditors Tuesday the airline was limping along as a ″limited charter carrier″ while seeking a buyer and continues to run up expenses under bankruptcy proceedings.
″We have a number of alternate plans, but each plan requires investments,″ said Howard McKinnon, the company’s chief operating officer, who along with Braniff Chairman Bill McGee has been talking to potential investors or outright buyers for the Orlando-based airline.
The lack of adequate funding ″prevents us from having any meaningful discussion or planning,″ McKinnon said, adding that pressure from creditors ″clouds this whole issue.″
Howard T. Glassman, a Philadelphia lawyer representing Braniff, told the creditors in one of a series of meetings conducted by the bankruptcy trustee that there was no clear picture of the airline’s future.
But officials said they do not expect Braniff to go into liquidation and sell its assets.
The company, which filed for Chapter 11 protection from creditors Sept. 28, has 275 to 300 employees left from a total of about 4,800, the officials said. It is losing money on a charter operation run by 15 pilots.
Mark Osterberg, Braniff’s senior vice president for finance, said in response to questions from creditors’ lawyers that the company had about $500,000 cash in hand and monthly expenses of about $1.7 million, including $1 million in payroll for remaining employees. The figures do not include hefty legal fees, the charter operation 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 this coming month, he said.
Osterberg was unable to estimate how long the airline could continue to operate in this manner.
Braniff executives acknowledged they were behind on bills, including payments due airports in Kansas City, Mo., and Dallas.
Glassman has been fighting attempts by a group of aviation companies to cancel Braniff’s long-term lease and purchase agreements for 50 Airbus A320 jets. He reported that Braniff had received a favorable ruling on what he called ″our major assets.″
U.S. Bankruptcy Judge C. Timothy Corcoran concluded last Saturday that Braniff’s contracts are valid and that the aviation companies have to deliver the planes.
Braniff has an option to buy another 50 Airbuses, in addition to the complex agreements to lease 26 Airbuses from Ireland’s GPA Group Ltd., buy another 24 from Avsa SARL and finance the transaction.
Braniff considers those contracts ″the linchpin to enable the debtor to go forward,″ Glassman said, meaning the airline can sublease the planes or sell the contracts. The agreements for the jets also make Braniff more attractive to potential buyers.
Braniff, however, failed to come up with $3 million in lease payments for five Airbuses it has already received from GPA, and it may have to return the aircraft.
Under terms of another ruling issued Monday, GPA would be free to sue Braniff to get the five jets if Braniff did not make the $3 million payment by midnight Monday.
Glassman said 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 crucial, he said, is the judge ruled that Braniff’s contracts for the total number of planes are valid, despite the bankruptcy proceedings.
″All we want is to market this position and raise money based on these planes,″ he said.