URGENT People to Buy PBA
URGENT People to Buy PBA
Jan. 31, 1986
NAPLES, Fla. (AP) _ People Express Airlines said Friday it has tentatively agreed to provide Provincetown-Boston Airline with a desperately needed cash infusion and to eventually buy the troubled commuter carrier.
As part of the arrangement between Naples-based PBA and Newark, N.J.-based People, PBA's secured creditors agreed to pump an additional $500,000 into the carrier, once the largest regional airline in the nation, People Express said Friday evening.
In addition, People said it has agreed to provide as much as $700,000 in additional loans to PBA.
''The terms of the proposed acquisition have not yet been negotiated,'' People Express warned in the release. Once negotiated, the deal must be approved by PBA's creditors and a bankruptcy judge.
If the purchase is approved, PBA will continue to fly as a separate carrier, serving its traditional routes in the Northeast and Florida, People Express said.
Five year old People Express recently bought Frontier Airlines, extending its discount network nationwide.
PBA President Peter Van Arsdale earlier this week indicated he would shut down the airline, founded by his father, unless it could solve its cash problems by Friday.
Negotiations with a potential investor continued Thursday and Van Arsdale emerged from those talks confident that an agreement would be signed.
''This deal has to work out, or that's it,'' Van Arsdale said Thursday. The negotiations were believed to have been with People.
Van Arsdale said then that PBA had ''a better than 90 percent chance'' of securing an investor or buyer for the Naples-based carrier, which failed to meet its payroll on Jan. 15 for the first time in its history and faced another $650,000 payroll for its 650 workers late Friday.
It eventually met its Jan. 15 payroll, in three installments during the past two weeks.
Meanwhile, attorney Harley Riedel said the airline's lawyers obtained permission in U.S. Bankruptcy Court Thursday to take out an emergency $500,000 bank loan, but only if it finds a buyer.
PBA was once the nation's largest commuter line. It has been operating under Chapter 11 of the federal bankruptcy laws since last March.
With about $18 million in debt, it has sought a buyer for several months.
Donna Fiala, a spokeswoman for PBA, said the airline's bookings have held up fairly well, despite publicity about the possible demise of the carrier that once had a fleet of more than 100 planes and 500 daily flights.
The airline began to decline in 1984 when the Federal Aviation Administration shut it down for two weeks because of falsified pilot training records. The carrier resumed flying, but was rocked by a fatal plane crash in Jacksonville two weeks later.
Van Arsdale, whose family founded PBA on Cape Cod, Mass., in 1950 and expanded it to serve both the North and South along the East Coast, said Thursday that he had not developed a contingency plan for a possible shutdown.
He said the airline expected to fly its normal schedule of 300 flights Friday and worry later about flying its fleet back to Naples if necessary.