It may be a banner year for the major airlines, but two start-up carriers that serve California--Western Pacific and Vanguard--are grappling with heavy turbulence.
Their financial problems already have forced one, Vanguard, to trim its service to the state, and more setbacks could further jeopardize local travelers' ability to use the pair's low-fare service to selected cities in the Rockies and further east.
Western Pacific is based in Colorado Springs, Colo., with service to 22 cities that include Los Angeles, Ontario, San Diego and San Francisco. The airline--known for its elaborately painted jets that serve as flying billboards for advertisers--began operating 18 months ago.
But Western Pacific recently posted a third-quarter loss of $910,000 on revenue of $46 million, and its stock has tumbled to about $9 a share from $16 five months ago. Last week,(11/21) the airline tapped former Trans World Airlines executive Robert Peiser to be its chief executive, succeeding Western Pacific founder Edward Beauvais, who remains chairman.
Vanguard recently ended unprofitable service to four cities from its hub in Kansas City, Mo., and cut its flights from Kansas City to Los Angeles and San Francisco to once daily from twice.
Vanguard lost $3.6 million on revenue of $19.9 million in the third quarter. Its founder, Robert McAdoo, recently resigned as chief executive and was replaced by John Tague.
Besides the normal problems that plague fledgling carriers--such as sorting out which routes are prosperous and having enough capital for the lean times--there have been other setbacks this year. Among them: higher fuel costs and adverse publicity from the spring crash of a ValuJet Airlines plane in Florida, which made many people reluctant to fly young carriers.
James F. Peltz can be reached via e-mail at email@example.com