National_757 From , joined Dec 1969, posts, RR: Posted (11 years 6 months 1 week 5 days 20 hours ago) and read 1276 times:
Just read in the Las Vegas Sun that Kansas City's Hometown airlines (Vanguard Airlines) was turned down for a loan by the U.S. Air Transportation Stabilization Board. Here is the link to the story
So my question to all of you, does this mean the end of Vanguard Airlines if they cannot get financing? I'm afraid that this could mean that National Airlines will also not get their loan approved, which will just about mean the end for that airline
Goingboeing From United States of America, joined Dec 1999, 4875 posts, RR: 18 Reply 2, posted (11 years 6 months 1 week 5 days 20 hours ago) and read 1242 times:
BA...Vanguard will be fine? You might want to phone their headquarters to tell them. From their 10Q quarterly report:
On December 29, 2000, the Company entered into a loan agreement with a related party to borrow $3.0 million. The Company received approximately $2.6 million in cash net of the first loan payment, a security deposit and loan costs. The obligation is secured by various aircraft parts and ground equipment. The obligation is payable in monthly installments through December 2003, including interest at prime plus 2.5%. This agreement provided the Company the ability to borrow up to an additional $1.0 million under substantially the same terms as the initial loan. As of March 31, 2002, no additional borrowings had been made against this facility. At March 31, 2002 and December 31, 2001, this debt was in default due to delinquent payments. Accordingly, this amount has been classified as a current liability on the accompanying balance sheets.
In 2001, the Company entered into lease deferral notes payable for approximately $5,582,000, including approximately $200,000 of accrued interest, with certain of its aircraft lessors. Additionally in 2001, the Company issued a note payable for $999,000 to a lessor to satisfy its maintenance obligation at the scheduled return of an aircraft. Repayment of these loans, including accrued interest at 10%, generally was scheduled to commence in July 2001 with maturities varying through December 2002. To date, the Company has not made any of the payments required under these loans and was, therefore, in default of these notes at March 31, 2002 and December 31, 2001. Accordingly, these notes have been classified as a current liability on the accompanying balance sheets. These notes are callable upon demand and the Company is accruing penalty interest at an annual rate of 14%.
The Company has also not made certain payments required under its aircraft leases. All required lease payments (and interest at contractual rates) due under the Company's lease agreements (without acceleration) with respect to periods through March 31, 2002, have been accrued in the statements of operations and all such amounts which had not been paid as of March 31, 2002, are reflected as accounts payable in the balance sheets.
The Company has received notices of default from certain of its aircraft lessors. The Company intends to seek revised lease terms (including forgiveness of certain unpaid lease payments and reductions in future rental obligations) with all its aircraft lessors in connection with the Company's efforts to obtain new financing. The Company intends that such revised terms, if agreed to, would allow for the removal of the notices of default.
I really would like for Vanguard to make it...but they have a very long way to go, and their survival is in no way assured.
AeroGlobeAir7 From United States of America, joined Jan 2001, 586 posts, RR: 2 Reply 4, posted (11 years 6 months 1 week 5 days 19 hours ago) and read 1223 times:
I think I'd be willing to side with BA. I don't think they'll get out of the red anytime this year, but I think we can expect them to turn into the next AirTran someday. Maybe even Southwest, give em' 30 years. . And yes, they are making some serious financial improvement. First quarter loss was $4 million less than 4th quarter 2001. Those MD's, and their "new" look have been helping them I guess . By the way to all you low fare airline fans.....Kansas City-Seattle/Tacoma services start in the next week! FLY VANGUARD!!!
Goingboeing From United States of America, joined Dec 1999, 4875 posts, RR: 18 Reply 5, posted (11 years 6 months 1 week 5 days 17 hours ago) and read 1174 times:
Those statements were from the 10K from May 29, 2002. Yes...losses did drop from $11 million to 8 million, but the haven't been making payments on their aircraft. They are in default Operating like that would be akin to McDonalds not paying for beef. They haven't been making payments on loans....and they have repeatedly stated that if they don't get even more financing, there is a good chance that they will go out of business. I thought the 10K was pretty telling, but it does only address the financial side of the house and not the important things like the color of the fuselage.
Lowfareair From , joined Dec 1969, posts, RR: Reply 6, posted (11 years 6 months 1 week 5 days 17 hours ago) and read 1166 times:
I think there is an airline which could help Vanguard's woes: AirTran.
Think about it. AirTran would offer strong East coast service via ATL, and it would provide Vanguard with pax going to the west. Both airlines offer similar fares, and they both want to get bigger. If AirTran gave them a small low-interest loan, then Vanguard could use that and a code-share with FL to get out of the pool of red ink.
Jettblasterp From United States of America, joined May 2000, 203 posts, RR: 1 Reply 7, posted (11 years 6 months 1 week 5 days 17 hours ago) and read 1163 times:
I am with you Goingboeing. I am hearing the owe MCI millions as well as fuelers and other vendors. It won't be long before the lessors start reposessing (sp?) their planes. I wish them luck (well, not really) but I don't think it will be long now.
Mariner From New Zealand, joined Nov 2001, 23873 posts, RR: 87 Reply 8, posted (11 years 6 months 1 week 5 days 15 hours ago) and read 1133 times:
Sorry, BA, but we're at odds over this. The airline has never made an annual profit in all of it's existence.
According to the latest quarterly report filed with the SEC, Vanguard lost $8 million for the first quarter of this year. This may not seem like a lot, but they also quoted a working capital deficiency of about $51 million and a shareholder deficit of about $36 million. This is a lot of money for a tiny airline operating in the red.
They have been in default of their lease payments to Pegasus for the MD 80's for some time now. Pegasus has forgiven some of that debt for equity.
But what equity?
They have no assets, all of their planes are leased. How they got a loan using "certain aircraft" as collateral is beyond me, since they don't own any aircraft.
Vanguard has been kept in the air by William Hambrecht and a couple of others, who have constantly forgiven debt for equity.
They originally applied to the ATSB for a loan guarantee for something in excess of $50 million, which is about what they need to stay afloat. They were warned that this would not be approved, and refined it down to $15 million, but even that was rejected.
Since Hambrecht could easily guarantee that amount - $15 million - you have to wonder if he is finally tired of flushing money down the toot.
Sure, they may a good summer, they may perhaps break even for a quarter, but then we're back to square one - an over-expanded, over-expanding airline (with a hub that has never worked) and that doesn't make money.
Deltaflyertoo From United States of America, joined Nov 2000, 1617 posts, RR: 1 Reply 9, posted (11 years 6 months 1 week 5 days 15 hours ago) and read 1118 times:
Mariner and GoeingBoeing have good points.
To add my 2 cents, indeed they have never turned a profit except for one 1 quarter back in the spring of 99. Their route structure now is somewhat secure but as of 6 months ago was a little on the erratic side. I think they have found a small niche that is loyal, but not a big enough one to turn a profit. They are in massive, massive debt. Nasdaq has made it known they don't want them. It looks bleak. BA, lets say they did turn a profit this summer and through to 03, from there on out my guess is they would have to have many years of straight profitability, high loads and yields to get out of what they are facing now. As we all know, no airline really achieves this in the long run. Vanguard is no exception.
Srbmod From United States of America, joined Mar 2001, 17267 posts, RR: 51 Reply 10, posted (11 years 6 months 1 week 5 days 1 hour ago) and read 1078 times:
Vanguard is seriously in need of a white knight. They orginally made overtures to Frontier for a merger, and were rebuffed. The switch to MD-80 family aircraft lead me to think that they are positioning themselves to be taken over by someone like AirTran or Spirit. The two biggest thorns in Vanguard's side are AirTran and Midwest Express. Several years ago, Vanguard operated a small hub @ ATL, with flights to several cities. They dropped down to just flights to MCI after AirTran entered both MYR and PIT. Midwest Express established at hub @ MCI and also started competing with them on the MCI-ATL route. Vanguard has been trying to salvage some form of the airline for quite sometime, and what amazes me is the fact they lasted this long based upon their continuing financial problems. If I was Pegaseus Leasing, I'd repo those planes, and U.S. Airways Leasing (NJ leases their 737s from them) should do the same. Vanguard needs to be bought out, or folded for financial reasons.
AirT85 From , joined Dec 1969, posts, RR: Reply 11, posted (11 years 6 months 1 week 5 days ago) and read 1054 times:
vanguard is my favorite airline, and i truly do hope htye make it. However, as has been mentioned, they have more going against them than with them. Do you think that if NJ folded, AirTran would 1)buy them out or 2)salvage the MCI operations and turn it into their jumping point to the west coast? I think number 2 could work, a lot of cities NJ flies to already have FL service, or could use it. Who knows, might happen. might not.
Goingboeing From United States of America, joined Dec 1999, 4875 posts, RR: 18 Reply 12, posted (11 years 6 months 1 week 5 days ago) and read 1043 times:
Vanguard really has no "assets" other than their employees. MCI would seem like a good spot for AirTran to make a midwestern hub for extending service to the west, but MCI really sucks for hub operations because of the design of the terminals (connecting passengers have to reclear security being the biggest hassle), and the city fathers are not willing to redesign it to better suit a hub operation.
Spinkid From United States of America, joined Jul 2001, 1041 posts, RR: 0 Reply 13, posted (11 years 6 months 1 week 4 days 22 hours ago) and read 1022 times:
I think Vanguard has little to offer Air Tran, it's not like they have a large hub in Kansas City, and from the sounds of it, it's not the best hub in the world to have if they did. How loyal is their customer base in the area? Is that worth acquiring them for? It seems like just the past couple of years, that they have settled into Kansas City.
DCA-ROCguy From United States of America, joined Apr 2000, 4418 posts, RR: 35 Reply 17, posted (11 years 6 months 1 week 1 day 5 hours ago) and read 936 times:
A major reason that Eastern's hub at MCI failed was that they used a lot of 150-seat a/c for it. Even New Braniff, which used a combination of 100-ish seat 732's and 150-ish seat 722's, couldn't make MCI work. The impression I have gotten is that Kansas City simply doesn't have the population base, and isn't close enough to enough big enough cities, to work as a hub airport with airplanes bigger than 100 or so seats. If that many.
And since the low-fare model has never been tenable on aircraft smaller than 100-configured-for-118 seat 737's, Vanguard may be in real trouble. If they can't seize enough O & D at MCI to fill those planes, sadly, they won't be able to make it. And with big Southwest and Midwest Express operations already seizing the bulk of "non-Cartel" market share at MCI, I think Vanguard may be in real trouble.
If Vanguard goes under, don't look for AirTran or anyone else to take over their MCI operations. Most likely, WN and YX will increase capacity just enough to get the pax that Vanguard was flying--which capacity won't be anywhere near the capacity Vanguard now offers.
DCA-ROCguy From United States of America, joined Apr 2000, 4418 posts, RR: 35 Reply 18, posted (11 years 6 months 1 week 1 day 5 hours ago) and read 934 times:
THe important detail I just left out--the key point of the post--is that Vanguard's move to MD-80 aircraft, which must seat between 140-150 as Vangauard has them configured, could be fatal. If 737's are tough to fill on a hub operation at MCI, bigger MD-80's will be even tougher to fill.
BUFJets From United States of America, joined Jan 2001, 231 posts, RR: 0 Reply 20, posted (11 years 6 months 1 week 1 day 2 hours ago) and read 881 times:
I don't think anyone can judge Vanguard's decision to switch to MD-80's based on capacity alone. For example, they acquired some MD-87's for longer range flights. MD-80's are stage III compliant and have better fuel efficiency. 737-200's are disappearing fast in the domestic US. Delta Express and Southwest are the only two I can think of. Southwest only flies them in close range of their maintenance facility in Texas. Maybe it's hard to get 737-200 spares quickly at many airports? Maybe Vanguard got some great lease deals on the MD-80's?