National Airlines Ceases Operations
 

National Airlines Ceases Operations

(edited to fix typo in link)

[This message has been edited by anthonyanthony (edited 11-06-2002).]

Another one goes on the heap.

I never flew with them but one must mourn the loss of choice.

How was it? From those who had flown it.

NATIONAL AIRLINES
CEASES OPERATIONS

LAS VEGAS, NV (NOV 6) - National Airlines announced that it will cease operations, effective November 6, 2002. The cessation of operations was necessitated after the carrier was unable to complete a previously announced agreement to the satisfaction of its senior management, Board of Directors, aircraft lessors and other key creditors.

Customers with tickets on National Airlines that were purchased with MasterCard or VISA credit cards may apply for a refund through their credit card company. Customers using other credit cards must inquire at their respective credit card companies about refunds. Customers holding tickets for future National Airlines’ flights should be able to fly on other carriers based on those respective carriers’ acceptance program as outlined by Section 145 of the Aviation and Transportation Security Act. Use of National Airlines tickets on other carriers may affect customers’ refund requests with their respective credit card companies. Refunds for tickets from National Airlines will not be available.

Michael J. Conway, president and CEO, said, “This is a very sad day for the 1,500 employees of National Airlines, the City of Las Vegas and Southern Nevada, as well as the traveling public who now have one less choice to meet their travel needs.” He added, “We exhausted every possible viable alternative in seeking funding to maintain our ability to fly and serve hundreds of thousands of people each month. Unfortunately, we could not obtain the support necessary and were forced to make the very difficult decision to cease operations.

“We were very close to completing a successful reorganization on a few different occasions, only to have additional obstacles confront us at the last minute. We were able to meet all these challenges successfully, until now.

“I truly hope that other carriers pick up the service vacuum and still maintain the low fare competition that National brought into every city we served.”

“Despite our unfortunate decision to cease operations, I am very proud of what we were able to accomplish at National Airlines, and extend my heartfelt thanks to all of National’s employees, who responded so admirably to every new challenge.

“I would also like to thank the more than 7 million passengers that have flown on National over the past three years,” Conway concluded.

This is unfortunate --

Truly a nice little airline with good service offering great first class fares - so we deserve what we get - we complain about service quality, fare rules and costs and then don't bother to patronize an airline that tries to deliver.

Goodbye and good riddance to National -- it was a pimple on the buttcheek of the airline industry.

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Thank you for choosing Continental Airlines, a proud member of the SkyTeam Alliance.

Now we'll be screwed by UA with those exorbitant $150 (comparatively speaking) fares SFO/LAS. We certainly deserved what we got...although I must admit it was hard to choose N7 in the last few months with the looming shutdown.

[This message has been edited by a330300 (edited 11-06-2002).]

Good riddance is more like it. The longer that National Airlines continued to operate a financially unfeasible operation, the more it hurt the industry as a whole. Arguably, were it not for the sizeable cash bailout they received last year, they would have faded quietly into Chapter 7 long before now. Instead, they continued to undercut the market's revenue stream in a desperate attempt to stay alive, secure in the knowledge that the beauty of bankruptcy law prevents them from ever being held liable for the mountain of accumulated debt. The airline has had multiple chances to transform themselves into a viable entity, but they continue to rebuff those and pursue the same tried-and-tested business practices that led them into Chapter 11 in the first place. They are a disgrace to the industry and I for one will not shed a tear now that the inevitable shutdown has occured. The industry as a whole will be better off without them.

It makes me wonder what was it with all the $1.00 seats they sold for 9/11/2002. I actually bought one, but ended up never using it. If they saw all their money quickly running out, why did they start then giving away seats? I guess they wanted a quick suicide.

Am I the only one that is surprised here?

I flew them on one of the $1 tickets, and like them quite a bit. very uncomplicated.

I feel sad for the 1,500 National employees that will not have jobs tomorrow. It's a shame this could not have been avoided. That's 1,500 more people looking for jobs in an airline section that has very few jobs to offer.

Anytime there is less competition in the marketplace it is not good for consumers.

The key difference between National and other carriers is that whereas other carriers took the initiative to modify their business plans to transform themselves (or at least attempt to transform themselves) into financially viable entities, National continued to head the wrong way down a one-way street. They made a mockery out of the free market by becoming the least common denominator in the markets they compete, but operating revenue-negative subsidized by their unsecured creditors and the US taxpayer. Even Pavlov's dog learned his lesson after getting burned a few times. Sadly, National's management didn't.

In every market there exists a least common denominator (LCD), providing a basic product for the lowest price. The passengers with ultra-sensitivity to price will gravitate towards this operator, sacrificing quality and/or convenience for price. All other operators provide value-added services for higher prices, hence giving the consumer a freedom of choice. This is a fundamental concept of the free market system and a big reason for the success of carriers like Southwest.

Unforunately, this system breaks down when the least common denominator begins offering a product below their costs for extended periods. In the case of National, they were able to do so because of the protections accorded by Chapter 11 bankruptcy (which they have been operating under since well before 9/11) as well as the cash bailout they received from the Federal government following 9/11. As a result of this, the other competitors in the market are also forced to reduce their prices in order to remain competitive (since they cannot be competitive with prices that exceed those of the LCD plus the value added services provided). Often, the competitors are also forced to sell their products at a loss. The cycle ends only when the LCD goes out of business and prices return to their natural level. In the meantime, the other competitors in the marketplace have been incurring losses and suffering harm.

National continued to sell services at a price below what it takes to make a profit, in the hope of attracting sufficient market share that they could either collateralize or use to incentivize a potential buyer. They subsidized these losses by discharging their debt through Chapter 11 protection and through the Federal government's cash bailout. They sought to cut their labor expenses even further rather than addressing their revenue stream. It was a completely flawed business model with absolutely no hope of success, something that was proven multiple times over with their trip to bankruptcy, their ATSB rejection, etc... Unfortunately, Mike Conway chose to pursue this loser model, rejected any recapitalization offers that excluded him from decision making and essentially dragged everyone else down with him as they continue to plunge deeper and deeper into the abyss.

I actually flew them last May with my family and theyy were great. How truly sad

I liked them when I flew them to vegas, kinda bad they are dead. Now what will happen to those cheapo vegas fares?

WHERE TO START!!!

Yes – little failures like WN and Wal-Mart come to mind


Debt is not a candy store – the credit is underwritten and funding is not in control of the borrower – the lenders made decisions that endorsed and supported the model - you make it sound like management just kept dipping into some cookie jar of debt.

If this is a sign of failure at this point in the cycle I guess we need to shut down, UA, AA, DL, NW, CO …

Losses of course can NOT be sustained and we will see several more attempts to dedefine the industry before it is all over

And the majors have such a wonderful business model http://www.flyertalk.com/forum/smile.gif

OK Sean – time to put down the FAR’s and start reading the Federal Bankruptcy Code – the CEO is so far from being unilaterally able to do this that it is not even worth debating. The guy in the black robe is running the show – I executed DIP (debtor in possession) financing syndications for 3 airline clients in the 80’s and I can assure you that the CEO does NOT call the shots.

I think you have missed the point made by many – their service was FAR superior to that offered by their competitors. It just goes to validate the barriers to entry in this industry.


http://www.flyertalk.com/forum/biggrin.gif http://www.flyertalk.com/forum/biggrin.gif http://www.flyertalk.com/forum/biggrin.gif

If you still want to fly N7
Travelocity is still selling tickets!
Suprised they havent pulled?

K

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