Only County-Based Airline Prepares Bankruptcy Filing

Resort Commuter airline, which operated as Pan Am Commuter, has suspended service and is preparing to file for bankruptcy protection from creditors, its president said Thursday.

The Chapter 11 filing “is imminent,” said Robert O’Keefe, president and chief executive of Resort Commuter Inc.

O’Keefe said that Resort officials are talking to several potential buyers, including another airline, but added that he “would not call any of the discussions serious at this point.”

He said the carrier has been losing about $100,000 a month.

Resort’s financial problems stem from an ill-fated attempt last year to operate daily service from Southern California to the Baja California resort towns of Cabo San Lucas, La Paz and Loreto.

That service ended in May, limiting the airline’s routes to seven daily round trips between John Wayne Airport and Los Angeles International Airport.

The decision to stop all service Wednesday placed most of Resort’s 30 employees on unpaid leaves.

Resort, which started in 1983 as Catalina Commuter, has been the county’s only locally based airline since AirCal was acquired by American Airlines in 1987.

It has operated as Pan Am Commuter for the last two years under contract to serve Pan Am’s Los Angeles fleet as a feeder carrier. It was one of five commuter lines operating from Orange County.

Airport officials last month awarded Resort a 60% increase in its annual passenger allotment because its business had been picking up and it was in danger of exceeding the earlier annual limit of 15,500 passengers.

But the additional business has not been enough to staunch the hemorrhaging caused by the Baja misadventure, O’Keefe said.

The carrier, owned by Beverly Newport Aviation--of which Newport Beach auto dealer Jim Slemons is a major shareholder--agreed with creditors in July to reorganize in return for a moratorium on debt collection and a debt-for-equity swap, O’Keefe said.

Resort said at the time that it had $525,000 in assets and $17 million in debt, including nearly $12 million owed to Jim Slemons Leasing, which leases three 18-seat deHavilland Twin Otter turboprop planes to Resort.

But efforts to find more capital--through operating economies or new investors--so far have failed.