Pro Air files for bankruptcy; Northwest stops accepting tickets

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DETROIT (Reuters) -- Discount airline Pro Air filed for bankruptcy protection Tuesday after being grounded by the Federal Aviation Administration because of "unairworthy aircraft."

The move prompted Northwest Airlines Wednesday to stop accepting tickets from Pro Air passengers.

Pro Air, which flies out of Detroit's City Airport, said late Tuesday that the suspension, which also cited maintenance, quality control and record-keeping problems, was based on "erroneous and outdated information and will be overturned on appeal."

The company filed for bankruptcy protection under Chapter 11 of U.S. Bankruptcy Code "to preserve our existing resources, including the fleet of aircraft," Craig Belmondo, the airline's president and chief operating officer, said in a statement.

"We are confident that we will be resuming scheduled operations following the completion of the appeals process."

The Seattle-based company has 10 days to appeal the emergency order of suspension to the National Transportation Safety Board, the FAA said Monday when it announced the action.

Pro Air Vice President Eric Steinwinder said the airline also had a 48-hour window to appeal to the NTSB on the emergency nature of the FAA's ruling.

"We absolutely intend to file an appeal," he said. "This is a blatant misrepresentation of the facts as presented by the FAA."

Steinwinder expects the first appeal on the decision to shut down operations to be approved, allowing the airline to resume operations by early next week.

He said the NTSB had 60 days to rule on the other appeal on the substance of the decision to revoke the company's certificate.

Neither appeal had been filed as of late Tuesday, Steinwinder said.

The FAA's director of flight standards, L. Nick Lacey, said Pro Air demonstrated it lacked the qualifications required of the holder of an air carrier certificate.

In June, the FAA said its inspectors identified a number of problems during an inspection of Pro Air. The three-year-old company's failures to correct those discrepancies led to the revocation of its air operating certificate by the FAA.

The inspection found Pro Air was operating "unairworthy aircraft," the FAA said.

It also was cited for failing to maintain an appropriate maintenance organization, failure to use adequate maintenance procedures, failure to conduct adequate continuing maintenance and failure to maintain required records.

Steinwinder said the June inspection followed a January review of the airline's records. Since then, he said FAA officials failed to respond to more than 10 formal letters and numerous verbal requests asking the agency to spell out their concerns and what the airline could do to address them.

Pro Air operates three 737 aircraft from its hub in Detroit -- the only carrier to operate in the city's east-side airport -- flying to Chicago, New York, Baltimore, Atlanta and Orlando.

The shutdown comes just as Pro Air was preparing to finalize a $70 million recapitalization that would have allowed the airline to restructure its debts and double its fleet.

The airline has long said it needs at least six aircraft to break even.

The FAA's grounding left hundreds of passengers stranded.

Northwest initially said it was waiving advance purchase restrictions and overnight stay requirements and offering the lowest applicable fares to people who could prove they had a Pro Air ticket. It also was working on a formal agreement with Pro Air to accept their passengers.

But in a statement Wednesday, Northwest changed course.

"Yesterday we worked extremely hard to come to an agreement with Pro Air so that we could assist their passengers affected by Pro Air's shutdown," Northwest senior vice president Dirk McMahon said. "At no time during those discussions did the Pro Air executives tell us that they were planning a bankruptcy filing within hours that rendered our agreement meaningless."

Greg Bowens, Detroit Mayor Dennis Archer's press secretary, said he hoped Pro Air was able to address the FAA's concerns as the "scrappy" airline had brought down prices in the area.

"For those who don't have long memories, everyone should be painfully aware of the chokehold that the major carriers had on Detroit and the high prices that resulted from a lack of competition," he said.

Copyright 2000 Reuters. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

FAA orders Pro Air to shut down
September 19, 2000

Pro Air
Northwest Airlines
FAA
National Transportation Safety Board
Detroit City Airport

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