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Arrow Air Files Under Chapter 11

February 12, 1986|PENNY PAGANO | Times Staff Writer

WASHINGTON — Arrow Air, citing increased problems since one of its military charters crashed in Newfoundland last December, announced Tuesday that it has filed for reorganization under federal bankruptcy laws.

The Miami-based airline said it will halt its scheduled passenger service immediately but continue to operate its cargo and charter flights.

The company took its action as the Air Force announced Tuesday that it had canceled four more Arrow Air charter flights scheduled to carry Navy personnel between the Philippines and the island of Diego Garcia in the Indian Ocean. Six flights had been canceled earlier.

Probe of Gander Crash

An Air Force spokesman said that the Arrow flights are being curtailed pending the completion of an investigation of the Dec. 12 crash of an Arrow DC-8 at Gander, Canada, that killed 248 soldiers of the 101st Airborne Division who were based at Ft. Campbell, Ky.

The soldiers were returning from six months of Mideast peace-keeping duty in the Sinai peninsula. Eight Arrow crew members also died in the crash.

Arrow's filing under Chapter 11 of the U.S. Bankruptcy Code will allow the airline to continue its operations while it reorganizes. The company filing listed assets of $14,625,539 and liabilities of $31,845,833. Arrow also listed 500 creditors.

As one reason for the filing, the company cited what it called an "unwarranted announcement" by the Federal Aviation Administration on Saturday that Arrow had used unapproved spare parts to maintain its DC-8 fleet.

It also noted pressure from Congress on the Pentagon to suspend all military contracts with Arrow.

400 Layoffs

In addition, Arrow listed "the determination of a congressional committee to prejudge the outcome" of the Canadian investigation of the December crash as well as the negative effects of media coverage of the accident.

However, Arrow's attorneys noted that the bankruptcy filing "will not affect insurance coverage or potential payments related to the Gander crash."

Company President Jon Batchelor said 400 of Arrow's 500 employees will be furloughed because of the filing.

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