Braniff Declares Bankruptcy, Cancels Most Flights
Braniff Inc. filed for bankruptcy protection and laid off 2,700 employees early today, a day after canceling flights through its major Kansas City hub and its Orlando home base for several hours, a spokesman said.
Braniff sought protection from creditors to allow it to reorganize under Chapter 11 of the U.S. Bankruptcy Code in the Florida city, said Don McGuire, the airline’s vice president for corporate communications.
“We expect to operate four flight segments, that’s non-stop services, between two cities today and we want to raise that to more than 40 by Monday,” McGuire said. “We’ll gradually expand the service.”
The flights will be between Kansas City and Orlando and Kansas City and Dallas, the company said.
The employee layoffs were to begin today, the company said.
The airline issued a terse statement late in the day saying it began canceling “selected flights” at 2:45 p.m. EDT and some additional flights would be scrubbed later.
Braniff had given no explanation for the action or the state of the airline in general.
As of last May, Braniff served 31 destinations from Kansas City and 16 from Orlando. It has more than 4,000 employees, including 440 pilots.
Braniff’s work force includes an estimated 2,000 employees in Kansas City, 1,165 in Orlando and 450 in Dallas.
Among the scrubbed trips Wednesday was a 4:30 p.m. flight from Los Angeles International Airport to Kansas City. Braniff operates five flights daily from LAX and two from Ontario Airport.
Telephone reservation clerks Wednesday night told callers that all of Thursday’s flights from Los Angeles had been canceled and that the company was “going bankrupt.” At Ontario, a Braniff employee dismantled the ticket booth Wednesday night. “They told us to pull the equipment,” the man said, as he carted away telephones and paper work. “This station is closed.”
Earlier Wednesday, according to a memo obtained by the Times, ticket agents were instructed not to issue Braniff tickets or to pay delayed baggage claims. The ticket agents were also instructed not to deposit the money received from customers Wednesday night.
Braniff canceled most of its afternoon and evening flights in Kansas City, Miami and Orlando and informed airport authorities in Kansas City that an unusually large number of aircraft would remain there overnight.
In Orlando, radio station WWNZ reported that Braniff employees were seen leaving the Orlando airport Wednesday afternoon with tears in their eyes, as the airline’s executives met to discuss the carrier’s future.
Braniff filed for Chapter 11 bankruptcy protection in May, 1982, and was grounded for nearly two years after that. It was resurrected by Jay A. Pritzker, chairman of Chicago-based Hyatt Corp., who paid $70 million for 80% of the company’s stock.
Fifteen months ago, after a failed attempt to merge with Pan Am Corp., Pritzker sold 64% of Braniff’s shares to an investment group formed by Paine Webber that included Jeffrey R. Chodorow, chairman of Coregroup, a Philadelphia investment firm, and New York real estate developer Arthur G. Cohen. At that time, four top officers from Piedmont Airlines joined Braniff, including Chairman William G. McGee.
The new owners moved Braniff’s headquarters to Orlando and shifted its hub from intensely competitive Dallas-Ft. Worth International Airport to Kansas City.
When Eastern Airlines, Braniff’s major competitor in Kansas City, filed for bankruptcy protection earlier this year, many expected Braniff to benefit. Just nine months ago, the attitude at the company was upbeat. In January, Braniff placed an order for 50 Airbus A320 aircraft and took options on 50 more. The deal, valued at $3.5 billion, would have more than doubled Braniff’s fleet to 171 from 71 by 1995.
In May, McGee announced an aggressive program that included expanding the work force by 35% companywide and constructing new maintenance facilities in Orlando and Kansas City.
In June, however, the company reported a loss of $21.2 million, or $1.44 a share, for the first quarter, leading to speculation that the airline might be expanding too quickly. The company cited the costs of expansion in Kansas City and elsewhere, as well as the higher costs of operating newly acquired aircraft as the reasons for the wider loss.
