Regional airline Shuttle America said it sought bankruptcy protection
yesterday, several weeks after scaling back its flights to Hanscom Field in
Bedford.
Shuttle America, a closely held start-up based in Windsor Locks, Conn., said
the bankruptcy filing wouldn't affect its current schedule, which mainly
links Hanscom with airports in Buffalo and Trenton, N.J.
The airline said its Chapter 11 petition for reorganization will help it
finance several small jets and keep up with debt obligations. Meanwhile, a
spokesman for the Massachusetts Port Authority said the agency has received
inquiries from two other airlines interested in using Hanscom for flights of
their own.
But the filing, in US Bankruptcy Court in Hartford, still comes as a blow to
efforts by Massport to divert passengers away from crowded gates at Boston's
Logan Airport.
Shuttle America's use of Hanscom also has angered local activists concerned
by the noise of scheduled commercial flights, and some of them said
yesterday's developments showed Hanscom can't support commercial operations
in any case.
Shuttle America chief executive David Hackett said the airline is operating
profitably. But the cost of expansion projects such as the purchase of
several new regional jets, at around $20 million apiece, is too high for the
airline to finance without restructuring its debt of about $18 million, he
said. Bankruptcy protection should simplify those talks, he said, and help
attract new investors.
''We were negotiating with our investors, and we saw it was going to take
too long to go to each creditor individually,'' he said. The company doesn't
disclose its losses but had revenue of about $30 million last year.
Shuttle America now serves five cities and recently won 14 coveted takeoff
and landing slots at New York's LaGuardia Airport. But it recently reduced
its service to New York to just one flight each way on weekdays, Hackett
said, because planes were traveling less than half full. Problems included a
lack of advertising money and ground delays the airline blames on
air-traffic controllers.
Other flights between Hanscom and other airports were operating at around 65
percent of capacity and growing, Shuttle America said. The company now has
250 employees, about half of them in New England.
Steve Jaffe, an airline analyst with Avitas Inc. in Chantilly, Va., said the
filing shows the difficulties that start-ups like Shuttle America face
without code-sharing agreements or another partnership with major airlines.
''They're trying to do something nobody has done successfully,'' Jaffe said.
''I'd like to see the little guy win, but the odds are against them.''
Local activists said Shuttle America's retrenchment shows little need exists
for commercial services at Hanscom. ''There hasn't been a successful
commercial service out of Hanscom, and this underscores it yet again. It's
not an area that requires that service,'' said Joan Goldmann, a member of
the ShhAir group in Concord, which opposes more commercial use of the
airfield.
Both Shuttle America and Massport dispute that view and said traffic figures
show growing demand. Shuttle America spokesman Mark Cestari said the airline
carried 160,000 people to and from Hanscom last year, more than all three
airlines that serve Worcester put together. ''The question has never been:
`Is there a market at Hanscom?' Clearly there is,'' he said.
Separately, Massport said it has received inquiries to use Hanscom from
Midway Airlines, of Morrisville, N.C., and from a unit of Pan American
Airlines, of Portsmouth.
In a letter to Massport dated April 16, a Midway executive wrote: ''There
exists a significant community of interest between Raleigh-Durham's Research
Triangle Park (our home) and the high-tech Route 128 corridor served so well
by Hanscom.'' The airline had been in talks with Shuttle America but has
since ''reluctantly concluded that we should separately propose service to
Hanscom,'' the airline wrote. Executives there declined to elaborate.
At Pan Am, senior vice president John Nadolny said the company is
considering flying between Hanscom and other destinations including Cape
Cod, Florida, and the Maritime Provinces. The company won't have more formal
plans until it obtains regulatory approvals by year-end, he said. ShhAir
says it will challenge any new entrants to Hanscom.
Massport said Shuttle America is now $15,000 behind on some lease payments
for its use of the Hanscom facilities. Massport now becomes a creditor,
along with the Connecticut Development Authority, which previously loaned
the airline $3 million. Donald Reed, a senior vice president of the
authority, said the agency declined to provide additional financing that the
airline recently sought. ''We were just at the limits of what we would do
for it,'' he said.
The Erie County Industrial Development Agency, a quasi-public agency in
Buffalo, owns 5 percent of Shuttle America. In addition to management,
Shuttle America's largest owner is venture capital firm Allegra Partners of
New York.
Regional airliner Shuttle America Inc. yesterday sought bankruptcy
protection from creditors, news that gave a brief lift to opponents of
expanded air service at Bedford's Hanscom Field.
But anti-Hanscom activists' joy over Shuttle America's woes turned quickly
to concern, as the Massachusetts Port Authority announced that two other
airlines, Midway Airlines and an affiliate of Pan Am, are looking to fly out
of the suburban airport.
Shuttle America said it has no plans to further reduce flights and will
honor reservations, as it seeks to reorganize its finances under Chapter 11
bankruptcy court protection. The Windsor Locks, Conn., airline previously
cut flights from Bedford to New York's LaGuardia Airport from six to one a
day.
The bankrupt airline, launched in November 1998, said it's seeking new
investment in hopes of expanding, and is looking for a deal with ``a major
airline partner'' that would let the two airlines market and sell each
other's seats.
Shuttle America's Chief Executive David Hackett downplayed yesterday's
filing, calling it ``business as usual'' for customers. He said the airline
is operating profitable routes but was undercapitalized in a tough
investment market. Several groups have expressed interest in investing in
Shuttle America if it moves to jets from turboprop planes. One would pay $20
million for control of the airline, Hackett said. ``We have to fix the
balance sheet.''
Activists scoffed at the assertion that the airline is well positioned.
``Filing Chapter 11 is not going to be a business plan that most businesses
want to encourage,'' said Margaret Coppe, president of Shhair, which has
battled the carrier.
Shuttle America did not list assets and liabilities in its filing in U.S.
Bankruptcy Court in Hartford. Court papers show its largest unsecured
creditors include Dehavilland Corp., the Dash-8 turbo-prop plane maker, with
a $4.4 million claim. Engine maker Pratt & Whitney Canada says it's owed
$2.4 million.
Massport, which runs Hanscom, claims it's owed more than $117,000. That's
disputed by Shuttle America, court records show. Massport Spokesman Jose
Juves said the airline was $15,000 behind in rent and fee payments as of
three weeks ago.
Massport said Pan Am affiliate Boston-Maine Airways wants to fly its 19-seat
Jetstream 31 turbo-props to the Cape and Islands, year-round, starting as
soon as June.
``We've been convinced for a long time that there's been a market from
Bedford to several points,'' said Dan Fortnam, vice president of marketing.
``We're in very preliminary stages.''
Midway Airlines, of Morrisville, N.C., has also notified Massport it's
interested in competing with Shuttle America by flying jets between North
Carolina's Research Triangle Park and Hanscom, in the heart of the Rte.128
high-tech corridor. Activists vowed to fight on. Anna Winter, executive
director of Save Our Heritage, said opponents are ``steadfast'' in their
devotion to protecting the historically significant area. ``We will fight as
hard, if not harder, than we did when Shuttle America came on the scene,''
she said.
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