Springs-grown airline exits town after struggling
through 1997
By KAREN SUCHARSKI Staff Reporter
Western Pacific Airlines had another exciting and volatile year in 1997. After gaining a new chief executive officer in 1996, the
young airline spent 1997 redefining itself and changing its operating strategies and even its hub to increase profitability.
Here is a look at the Colorado Springs-grown airline that we said goodbye to this year.
January
The Gaylord and the Hunt families each invested $10 million in the cash poor airline in exchange for 100,000 shares of
Series B Preferred Stock. WestPac's CEO, Robert Peiser, calls the investment a show of confidence by its major
stockholders in the airline and its direction.
A new blueprint of the airline included a frequent flyer program and first class seating. As part of the reorganization, the
airline dropped such unprofitable flights as San Antonio, Ontario, Calif., Las Vegas, and Nashville, Tenn. and increased
daily flights to other destinations, including Los Angeles, Phoenix, Chicago, and San Diego.
Peiser told City officials the airline would not fund the $35 million, 15-gate, east terminal. The City wanted assurances
that the young airline would not go out of business or move its hub before the City spent the money to expand the
airport, which only needed expansion to handle the traffic brought in by WestPac as a carrier and a competitive force.
After dropping service to Las Vegas, WestPac began negotiating with other unique vacation packages, including area
bed and breakfast establishments.
February
WestPac schedules and fares are displayed on the SABRE and Apollo national reservation systems used by travel
agencies. The airline's phone systems jamm, causing a drop in business.
March
The annual report reveals a disappointing loss of more than $23 million in 1996. But, first quarter operating revenues
were up 6.3 percent from $33.7 million in 1996 to $35.8 million in 1997. The airline reported a consolidated net loss of
$17.8 million, including expenses of $1.035 million attributable to WestPac's share of Mountain Air Express.
WestPac closed its mall ticket outlets after converting to the SABRE system March 7.
April
Load factors increased from 55.2 percent for April 1996 to 63.3 percent in 1997.
WestPac announced a $46 million alliance with Texas-based Perot Systems Corp. to provide the airline with technology
services from computer management to creating and servicing various Internet applications.
May
WestPac admitted it had been in discussions with Frontier Airlines for a possible merger, but said nothing was final.
WestPac and its subsidiary Mountain Air Express announced plans to move the bulk of their flights to Denver
International Airport.
Passenger load factors continued to increase to 65.6 percent, up 9.2 percent over May 1996. Mark Coleman, senior
vice president of marketing and planning, attributed the increasing trend to several factors, including changes in the
schedule that increased frequencies, the SABRE conversion, and the nearly 30 percent increase in connecting traffic.
June
The airline moved the bulk of its operations to DIA, leaving 24 daily departures from Colorado Springs, including five
Mountain Air Express flights. DIA received 69 daily departures, including 45 jet departures and 24 flights operated by
MAX.
Three institutional investors invested $10 million through the purchase of a three-year convertible preferred equity
security. GEM Advisors, Inc. arranged the financing.
Second quarter, ending June 30 and reported in August, showed operating revenues of $43.9 million, up $4.6 million or
11.8% over the same quarter in 1996. The net loss for the quarter was $17.7 million, including a $2.1 million loss
attributed to Mountain Air Express and $3.4 million in one-time, non-recurring, charges incurred as start-up costs at
DIA.
July
WestPac and Frontier announced their plans to merge. The new coordinated schedule was to begin August 1.
Load factors in July were up from 59.1percent in 1996 to 67.3percent in 1997,taking into account a 28.3percent
increase in capacity.
August
The airline stops using the $5 million satellite facility after moving the bulk of its flights to DIA.
The airline cuts back its gate use at the Colorado Springs airport from 10 gates to the six in its satellite terminal.
The Colorado Economic Development Commission agreed to give the airline $5.5 million in loan guarantees. The
money, which was to be used to collateralize the loans, came from the state's aviation fuel tax fund.
September
The previously announced merger with Frontier Airlines was called off. The agreement to cease codesharing became
effective November 16.
Third quarter results, reported in November, showed an increase of 45.7% in operating revenues from $45.5 million in
1996 to $66.3 million in 1997. The airline reported a net loss of $21 million, including $1.2 million attributable to MAX,
$8.8 million in one-time, nonrecurring charges related to Colorado Springs facilities, the terminated Frontier merger,
discontinued software, loss on the sale of an aircraft, and WestPac's investment in Colorado Springs Car Rental Inc.
October
WestPac filed for Chapter 11 bankruptcy protection.
The airline pulled all of its flights out of Colorado Springs, leaving its headquarters, reservation operations, and
maintenance operations.
Even though WestPac carried more passengers in October, taking into account a 37 percent increase in capacity, it
reported load factors of 51.3 percent for the month, down from 57.4 percent in October 1996.
November
MAX, which is 57 percent owned by WestPac, filed for Chapter 11 bankruptcy protection.
New York-based Smith Management Company offered to buy WestPac.
Later in the month a second proposal was entered into bankruptcy court. The proposal called for Wexford
Management LLC, a Connecticut-based investment firm, to dismantle the airline, selling some of its fleet to Frontier
Airlines and selling WestPac's other assets to pay creditors.
November load factors were down 10.2percent to 48.9 percent from 59.1 percent in the prior year period.
Year-to-date available seat miles were up 33 percent, revenue passenger miles were up 31.5 percent, passengers were
up 25.7 percent, and load factors were down 0.7 percent, according to the report.
December
The bankruptcy court approved the SMC buyout plan.
WestPac and DIA reached an agreement to allow the airline to continue to keep flying out of DIA. WestPac will pay
one month after payments are due in four weekly installments. Details of the airlines $80 million debt were also released.
It owes approximately 83 Colorado businesses for goods and services. It has more than $100 million in assets, primarily
accounts receivable. |
