After months of ongoing attempts to collect additional credit, the fate of Las Vegas-based National Airlines was finally decided when its top executive realized the bankrupt company could no longer meet payroll obligations to its approximately 1,500 employees.

"Without external financing, we've always known we'd come to a date where we'd have to make the very tough decision to cease operations," National Airlines President and Chief Executive Officer Michael Conway said Thursday, one day after his 4-year-old airline closed for good. "When (outside financial assistance) didn't come together yesterday afternoon, we could no longer take verbal assurances or anything else other than actual, tangible funding.

"If we took it past Wednesday, we would have been rolling the dice ... and risked not being able to pay our employees. We told our people, `If the worst happens, you're not going to get stiffed on your pay.' That was a serious commitment, and we took it that way."

So ended the brief history of National, which carried more than 7 million passengers to and from Las Vegas since its inaugural flight on May 27, 1999. Less than 24 hours after calling it quits, Conway said he was still concerned about his employees' welfare.

"The emotions are very heavy," said Conway, who added it's too soon to discuss his future plans. "The most satisfying thing for an entrepreneur is to create jobs and careers, and as satisfying as that is, that's how devastating it is when you have to eliminate the very jobs and aspirations that you created."

To that end, Conway spent most of the first day after the close of his airline working with members of National's management team to wrap up the airline's business operations. He said a parking lot full of workers showed up at corporate headquarters, many volunteering to assist passengers and other workers affected by the shutdown.

National spokesman Dik Shimizu said the airline has also worked closely with Nevada JobConnect, a state-backed employment service, to arrange training, counseling, insurance and job placement for the estimated 850 Nevada residents who lost their jobs Wednesday. About 650 ex-National employees live outside Nevada, Shimizu said.

Although the Warren Act typically requires a company to give its employees 60 days notice before laying them off, the federal law doesn't apply if the employer ceases to exist, Shimizu said.

Conway said National faced several unexpected challenges during its first few months that ultimately helped drive the airline out of business.

"First there was the Y2K issue, then we had fuel prices escalate well beyond where they had been for the previous eight and a half years," Conway said. "Despite that, we were able to achieve profitability in our tenth month and stayed profitable for six consecutive months before we ran into a recession."

Those problems were compounded by the Sept. 11, 2001, terrorist attacks, and later, National's inability to secure $50.5 million in federal loan guarantees from the Air Transportation Stabilization Board, he said.

"As a company, I don't think we've been very lucky," Conway said. "Everybody tried their best despite those difficult circumstances, and we probably prevailed far longer than anyone thought we would given the challenges. All the time I thought we operated a good airline."

National had reservations for nearly 500,000 passengers on its books when it closed, and nearly 70 percent of those bookings were for travel originating in cities outside Las Vegas. Conway believes most of those passengers will still travel on other airlines, although he warned the economic impact of those who stay away could be significant to the local economy.

"Those who do come will pay a lot more to get here because there's less competition, and the more it costs people to get here, the less money they have to spend once they've arrived," Conway said. "Alternative destinations also become more attractive, so the impact of National's absence is in the hundreds of millions of dollars in the short term."

Conway said he's not bitter National did not get more help from the local resort operators whose rooms his airline helped fill.

"To say that other major companies should have done more is a stretch," Conway said. "Would it have been nice (if they did)? Sure. ... But I don't think any private entity or government agency is entitled to do anything to help another private entity."

For the next few weeks, National will likely operate under Chapter 11 bankruptcy protection, Shimizu said. The company will later file for Chapter 7 liquidation.

Shimizu said National officials are unaware how Wednesday's announcement would affect the airline's scheduled Nov. 15 appearance in U.S. Bankruptcy Court. However, calls placed to the court clerk's office confirmed the company is still slated to appear before Judge Linda Riegle late next week.

It's doubtful there will be much left to liquidate. The airline last month relinquished its rights for slots servicing Reagan National Airport in Washington, D.C., and Shimizu said any other items of worth would likely be given to a trustee once the company enters liquidation.

National owes the Clark County Department of Aviation nearly $7 million, but spokeswoman Hilarie Grey said the department is not optimistic it will recoup those funds.

"It's in the court's hands, so if there are assets to be divided among the creditors we'd be part of that picture," Grey said.

If he could start the process over, Conway said he would have tried to collect $250 million in start-up capital rather than the $50 million he initially gathered.

"But I'm not sure we could have raised $250 million in 1998," Conway said.

Kew Gardens, N.Y.-based JetBlue Airways raised $130 million in start-up capital in 1999, making it the first and only U.S. start-up airline to launch with more than $100 million in capital.

Review Journal

-- Anonymous, November 16, 2002