Transamerica Airlines to Halt Operations : Carrier Unable to Find Satisfactory Buyer; 1,150 Layoffs Expected
Transamerica Airlines, a charter carrier hurt by increased competition since airline deregulation, said Friday that it will cease flight operations Sept. 30 due to continuing losses and its inability to find a satisfactory buyer.
The shutdown--part of an effort by the carrier’s parent, Transamerica Corp., to get out of the transportation business--is expected to result in layoffs of the line’s 1,150 employees. The Oakland-based carrier said it hopes to sell its 24 aircraft.
However, company officials and union leaders held out hope Friday that the airline could be sold whole and kept alive. “We continue to prefer that possibility,” Transamerica Corp. spokesman Richard J. Olsen said.
However, neither of two parties interested in buying the carrier submitted a firm offer with evidence of financing, “nor were their proposals competitive with the alternative of selling the airline’s assets,” Howard K. Howard, Transamerica Airlines’ chairman, president and chief executive, said in a statement.
One interested party, Meridian Partners, a New York investment concern, is still negotiating for a purchase. According to Walter Marshall, head of the Air Line Pilots Assn. unit representing Transamerica’s pilots, Meridian recently won a firm agreement with the airline’s pilots and a tentative pact with the flight attendants for wage and work-rule concessions in exchange for stock in the airline. Meridian officials could not be reached for comment.
The pilots union filed suit against the airline earlier this week, seeking an injunction to keep the carrier aloft.
The other party interested in buying the airline was an investor group made up of employees and some unidentified investors. However, the group dropped out of negotiations, Marshall said.
E. F. Hutton analyst Michael Lewis suggested that the planned shutdown is a “way of forcing the hand” of a potential buyer. Transamerica will likely get more than $300 million for selling its aircraft, including three Boeing 747s, he said.
The parent firm said in January that it would sell Transamerica Airlines and its other travel and manufacturing operations to concentrate on its core insurance and financial services businesses.
Transamerica Airlines, which offers charter passenger flights and cargo services for commercial and military users, was founded by Los Angeles financier Kirk Kerkorian after World War II. Kerkorian made much of his early fortune from the airline, selling it to Transamerica Corp. in 1968.
Before deregulation in 1978, it was considered one of the lowest-cost cargo carriers in the airline industry. But competition from lower-cost entrants in recent years has helped erode its profitability.
Transamerica Airlines’ losses from flight operations totaled $6 million in 1985 and $11.2 million in the first six months of 1986.