Arrow Air Ceases Operations,
Arrow Air, a Miami based operator of DC-10’s, has filed for bankruptcy with the US Bankruptcy Court in Miami, FL. At the time of the filing, the company listed debts of $100 to $500 million dollars, and declared assets of $10 million to $50 million dollars. Approximately 450 employees of the almost 600 employees have been laid off. The company is temporarily retaining about 130 employees, according to Doug Yakola, Arrow’s chief restructuring officer. In commenting on the cessation of service and bankruptcy filing, Yakola noted, "The debtors intend to implement the orderly wind-down of their scheduled service operations and the liquidation of their assets, subject to the availability of charter flying and any potential sale transaction that may arise in Chapter 11."
Arrow operations averaged more than 60 flights a week to and from the Caribbean and South America, with their fleet of seven DC-10 aircraft, for customers including the U.S. Postal Service and the Department of Defense. The FAA approved a request last year by Arrow and certificated them to begin operating Boeing 757-200 series aircraft.
The carrier filed for reorganization under Chapter 11 in June 2004 but quickly ran back into difficulty. Its 2008 losses were reported to be $28 million in 2008, with an additional $26 million lost in 2009, in spite of restructuring its aircraft leases, which led to lower operating costs.
In a statement released by the company, executives stated that, "Arrow Air has experienced significant operating losses as a result of increasing operating costs and declining revenue. The decision was not made lightly and was a last resort after the company exhaustively searched for other options including financing or a sale of the business."
"The increase in jet fuel prices outpaced the debtors' ability to increase their charges for services, causing the debtors to incur significant recurring operating losses and accumulation of a large operating deficit," they went on to say.
Arrow had announced plans to lay off over 450 employees in April, in a move to try and head off bankruptcy. Another Miami based carrier, Centurion Air, was reported to be interested in the company at that time.
Centurion is one of the leading South Florida operators to and from Latin America specializing in shipments of live animals and perishables. They are currently building a new 400,000 square foot cargo facility at Miami International Airport on the site of the old Eastern Airlines facilities. The facility when completed will accommodate nine MD-11 aircraft that the company plans to be operating by the end of this year, as they begin the replacement of their current fleet.
Week In Review News Items
Legislative, Regulatory & Safety
Family members of those who died in an upstate New York plane crash in early 2009 were in Charleston on Wednesday to push for stricter air travel safety laws and share memories of their loved ones. The smiling faces of the 50 people who died in the crash covered a display board at the Charleston Marriott Town Center as family members shared fond memories of their loved ones and urged Congress to strengthen regulations on the regional airline industry. The 13 family members were aiming their comments specifically at Sen. Jay Rockefeller, D-W.Va., who chairs the Senate Commerce, Science and Transportation Committee.
After using the federal rule-making process to solicit a couple hundred pro and con comments on a proposed ban on peanuts on commercial carriers, the U.S. Department of Transportation had to admit it was all just a drill. DOT lacks the authority to impose such a ban. Such an action would violate a year 2000 provision of the appropriations act that funds DOT. That law prevents DOT from banning peanuts or requiring any peanut-free buffer zone on any airline…U.S. FAA and Georgia Institute of Technology will research jointly the effects the NextGen ATC system will have on flightcrew members and controllers with respect to the "increased sophistication on the flight deck.”
Airline Industry Finances & Structure
U.S. airline stocks gained this week, a welcome change after the NYSE Airline Index lost approximately 14% of its value in the past two weeks on concerns of decelerating economic growth and a possible double-dip recession. Air Canada, US Airways, American Airlines/American Eagle, WestJet, Delta, AirTran and Republic Airways all released Jun-2010 traffic data yesterday…after years of speculation that it had outgrown the often chilly climate at Cleveland Hopkins Airport, Continental Airlines announced that it was leaving its Cleveland hub for the heat in Miami, opening a base there in a 3-way alliance with United and US Airways…American Airlines is exploring the possibility of selling its regional affiliate American Eagle, and industry analysts say Indianapolis-based Republic Airways Holdings could be a potential buyer…and EU antitrust regulators aim to decide by the end of the month whether to clear a plan by British Airways, American Airlines and Iberia to deepen their Oneworld alliance, an EU spokeswoman said on Tuesday.
Tarmac Delays
The number of U.S. airline flights stuck for at least three hours on airport tarmacs fell 86 percent in May, the first full month for a new rule that subjects carriers to fines for such delays. US Airways, which has its biggest hub in Charlotte, was the most successful major airline in getting travelers to their destinations on time, at 85.3 percent. Hawaiian and Alaska Airlines had the highest on-time rates overall in May.
Miscellaneous
Travel has always been a dynamic industry, with executives, managers and staff moving from company to company and into associations in the pursuit of new career opportunities. But suddenly, a fundamental changing of the guard is under way, and it promises to shake the foundations of the travel industry over the next two years…Wi-Fi connections in the air may not be the magical service capability that some in the travel world had hoped. Although airlines and providers of the service says they're pleased with consumer response, some analysts estimate that perhaps less than 10% of the passengers who could use Wi-Fi to log on to the Internet actually are doing so.
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