The Boston Herald
Wednesday, August 29, 2001

Tiny airline, losing flights, finds buyer
Shuttle America hangs on until court OKs its rescue

By Greg Gatlin

Bankrupt airline Shuttle America Inc. says a financial backer has agreed to
buy the regional carrier, pending court approval, and expects to name the
prospective buyer in court filings in Hartford today.

Such a deal would come even as the carrier slashes more flights at Hanscom
Field in Bedford, and the manufacturer of its turbo-prop aircraft takes back
its planes. Starting next week, Shuttle America's schedule calls for just
four daily round-trip flights at Hanscom - down from 17 in May. It will
operate with just one plane.

Meanwhile, the Windsor Locks, Conn., airline has been negotiating with
federal regulators to hang on to valuable, but unused, landing and takeoff
slots at New York's crowded LaGuardia Airport, in hopes of attracting a
buyer, bankruptcy records show. The carrier scrapped its Hanscom-to-New York
runs in May.

Starting in September, Shuttle America will ``temporarily'' reduce the
number of round-trip flights between Hanscom and Trenton, N.J., from six
daily to three, and between Hanscom and Buffalo from three daily to one,
said spokesman Mark Cestari.

He said the new cash will lead to renewed Hanscom operations later next
month and flights to LaGuardia in the fall - something it's promised for
months.

Cestari said Shuttle America's initial filing will outline a restructuring
plan that includes a capital infusion, debt restructuring and acquisition of
new turbo-prop aircraft.

Cestari said a financial backer would buy control of the airline, but would
only identify it as a large Connecticut investment group. ``This would allow
us to get back on a growth plan and reinstate flights from Hanscom to
LaGuardia,'' he said.

Under a court stipulation, Shuttle America is required to return by Friday
one of its two remaining leased Bombardier Dash-8 aircraft to the
manufacturer. Bombardier is slated to take back the other plane Sept. 30,
court records show.

Cestari said a cash infusion would allow Shuttle America to lease two more
Dash-8s this month from a different leasing company and resume canceled
Hanscom flights Sept. 9.

For months Shuttle America has said it's close to finding a buyer. It stated
in bankruptcy papers that several parties have made offers or expressed
interest in buying the airline for ``significant purchase prices,'' but only
if the airline retains its LaGuardia rights.

The slots, which let the airline use the major New York hub at certain
times, are subject to a Federal Aviation Administration ``use it or lose
it'' rule. If the airline doesn't fly out of LaGuardia with a certain degree
of frequency, it loses the slots.

Cestari said the FAA has granted Shuttle America waivers on the ``use it or
lose it'' rule through Oct. 1.


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