YOU ARE HERE: LAT HomeCollections

Orange County

Airport Cab Firm Nearly Loses Fleet

Bankruptcy: Company gets week to find buyer or have its taxis repossessed. O.C. arranges backups.


The financially troubled firm that holds the exclusive taxicab contract to serve John Wayne Airport is just days away from having its fleet seized by the Ford Motor Credit Co. after failing to pay for its cars.

American Livery, which operates American Taxi and filed for bankruptcy earlier this year, nearly lost its cars Wednesday but was granted a one-week reprieve by Ford during a court hearing. American executives argued that they had found a potential buyer for the business and needed more time to close the deal.

Bankruptcy Judge John Ryan said Ford Motor Credit, a subsidiary of Ford Motor Co., has the right to repossess American's 140 natural gas-powered vehicles if the company cannot present a signed sales agreement by Tuesday. Ford's attorney said in court that without a sale, Ford will give immediate notice to take possession of its cars.

That could disrupt airport taxi service just days before the Thanksgiving holiday--traditionally the busiest travel time of the year. Under the terms of its contract, American is the only taxi company that can pick up fares at the airport, although other firms may drop them off.

American's attorney told the court that the company has five potential buyers. Maryann Cazzell of Orange said American's financial difficulties were compounded by the Sept. 11 terrorist attacks, which triggered a slump in airline travel. Income from drivers dropped $100,000 in September, she said.

"Unfortunately, all this comes at a difficult time for the company," she said.

County officials have said that because of bankruptcy rules, they cannot cancel American's contract outright. But Ryan agreed to let the county set up contingency plans for taxi service should American no longer be able to perform, Deputy County Counsel James Harman said.

"We want to make sure there is uninterrupted taxi service at John Wayne Airport," Harman said.

Ford officials agreed to give the county 72 hours' notice before pulling American cabs off the street. The county, however, could be prepared to replace them earlier than Nov. 23.

County officials scrambled to line up enough cabs to take over for American on Wednesday after Ford warned it would reclaim its cars by 3 p.m. American's bankruptcy filing lists debts of $3.3 million to Ford Motor Credit Co. and another $450,000 to Ford Motor Co.

About 50 cabs from three Southern California companies assembled near the airport Wednesday, prepared to replace American's red-and-white cars.

The companies, now on call to step in and provide service if needed, are Yellow Cab of North Orange County, based in Anaheim; California Yellow Cab, based in Santa Ana; and Taxi Systems, also known as Fiesta Taxi, in Cerritos.

"It's a hurry-up thing," Larry Slagle, president of Yellow Cab of North Orange County, said earlier Wednesday when it appeared American would lose its fleet. The companies joined together a year ago to submit a losing bid for the contract awarded to American.

Mike Casey, president of California Yellow Cab, was angry about the delay and skeptical that a sale of American would go through. County officials have said that American's contract cannot be assigned to another company without the Board of Supervisors' approval.

"Next weekend is Thanksgiving, and we're not sure what's going to happen," Casey said.

His company and the others had to buy an additional $2 million in liability insurance, recruit more drivers and have each car cleaned and ready to go for Wednesday's aborted takeover, he said.

This is the latest in a string of missteps and problems with taxi service at the county's airport over the last four years.

American Livery was recruited in March 2000 to take over service at the airport after the previous cab company, A Taxi, failed to provide proof of adequate insurance. A Taxi had held the airport cab contract for three years. The previous company, owned in part by Slagle, held the contract for 22 years.

At the time it was chosen, American Livery had been in existence only four months. The county contract called for American to pay about $1.4 million to the airport over three years. The cab company was not required to tell the county how much profit it made on the contract, but estimates range from $5 million to $7 million.

A Taxi's loss of the airport contract led to a string of lawsuits. A Taxi, owned by Hossein Nabati, has filed several lawsuits against the county, American Chief Executive Rick Shorling, American Treasurer Lyle Overby, a county lobbyist and a former lobbyist for Nabati.

A separate lawsuit filed by a former partner in American accuses Overby and Shorling of fraud and breach of contract, claims they have denied through their attorney.

Los Angeles Times Articles