• E-mail
• Print
• Comment
• Font Size
• Digg
• del.icio.us
• Discuss article

Bankruptcy of Airline Serving Waterloo, Iowa, Airport Won't Reduce Service

Posted on: Friday, 14 October 2005, 21:00 CDT

By RC Balaban, Waterloo-Cedar Falls Courier, Iowa

Oct. 14--WATERLOO -- The bankruptcy of the regional air carrier serving the Waterloo Regional Airport will not mean a reduction in services, the airport's director said today.

Mesaba Aviation, which serves the Waterloo Regional Airport, filed for bankruptcy protection on Thursday, saying Northwest Airlines' fleet reductions forced it into Chapter 11.

Mesaba operates aircraft for Northwest under the name Northwest Airlink and is the only commercial carrier out of the Waterloo airport.

Northwest sets the prices and flight destinations for Mesaba.

Brad Hagen, Waterloo Regional Airport's manager, said he talked with Northwest officials Thursday and received assurances that additional flights would not be cut from Waterloo.

"They told us that they were committed to flying the full schedule," Hagen said today.

During the off-peak flying season, which stretches from about September through April, Waterloo's airport typically drops from six daily flights to five. This year, daily flights fell to four.

Hagen said during his talk Thursday with Northwest, he was told told the schedule would return to normal, with the fifth flight being added in April and the sixth flight in June.

Still, Hagen isn't surprised Mesaba would file bankruptcy. On Monday, new bankruptcy laws take effect that are considered unfriendly to companies. Also, Mesaba has indicated through filings with the Securities and Exchange Commission that bankruptcy was a possibility.

Mesaba's Chapter 11 filing listed assets of $108.5 million and debts of $87 million.

Mesaba parent MAIR Holdings Inc. said the bankruptcy was prompted by "cash shortages and significant fleet changes and uncertainties imposed on it" by Northwest Airlines Corp., which is Mesaba Aviation Inc.'s only customer.

The company said it expects to keep flying while in bankruptcy.

Northwest entered bankruptcy court on Sept. 14 and is cutting its domestic schedule to avoid unprofitable routes.

The Waterloo Regional Airport since it is considered one of Northwest's profitable service areas. When Northwest added flights to the Waterloo airport in 2003, the City of Waterloo had to agree to make up any financial deficit created by the flights. The additional capacity proved profitable and the city didn't have to pay.

Hagen said when Northwest and the airport were going through the process, the airline opened up its books and showed Waterloo as a profitable market.

Many of those Northwest cuts have fallen on its regional carriers, Mesaba and Pinnacle Airlines Inc. Northwest has said it will take away Mesaba's 35 Avro Regional Jets, about a third of its fleet of 100, although Mesaba hopes to keep 26 of those. And last week, Mesaba warned that Northwest said it would remove 10 Saab prop planes on Jan. 4.

Already, Mesaba has reported that its September capacity dropped 3.6 percent versus the same month last year.

Northwest's planned fleet reductions would ground about half of the smaller carrier's planes.

Mesaba has said Northwest owes it $30 million for flying done just before Northwest entered bankruptcy court -- equal to more than a quarter of MAIR's first quarter earnings of $118 million.

In its bankruptcy filing, Mesaba President and Chief Operating Officer John Spanjers said Mesaba will use bankruptcy to get "labor costs that will allow it to offer a competitive product to any major airline."

Spanjers told reporters that under its most recent flying agreement with Northwest, "there was a little bit more flexibility given to us on that, and those are things that we'll be talking about with Northwest."

But he said Mesaba's focus would be on fixing its cost structure so it can grow with Northwest.

"I don't consider our relationship broken, I don't consider our relationship in trouble," he said.

"Mesaba is a valued Airlink partner and we look forward to continuing to work with them," Northwest spokesman Kurt Ebenhoch said.

The Associated Press contributed.

-----

To see more of the Waterloo-Cedar Falls Courier, or to subscribe to the newspaper, go to http://www.wcfcourier.com.

Copyright (c) 2005, Waterloo-Cedar Falls Courier, Iowa

Distributed by Knight Ridder/Tribune Business News.

For information on republishing this content, contact us at (800) 661-2511 (U.S.), (213) 237-4914 (worldwide), fax (213) 237-6515, or e-mail reprints@krtinfo.com.

MAIR, NWACQ, PNCL,

Source: Waterloo Courier

More News in this Category