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Fairbanks air carrier seeks $10 million loan

Federal aid sought to help counter effects of Sept. 11 attacks

Posted: Tuesday, February 19, 2002

ANCHORAGE - Frontier Flying Service Inc. is asking for a $10 million federal loan to help it recover from the effects of the Sept. 11 terrorist attacks.

The 52-year-old Fairbanks-based company is only the third airline to apply for the government's $10 billion loan bailout offered to airlines to help with losses attributed to the East Coast attacks.

Frontier Flying Service offers five daily flights between Anchorage and Fairbanks, said Director of Operations Bob Hajdukovich. The company serves more than 50 communities in Alaska and is the largest commuter airline in the Interior.

In its loan application to the federal government, the company said its cargo and passenger operations saw a dramatic drop in activity following the attacks. Hajdukovich said the decreased operations coupled with increased insurance costs prompted the company to apply for the loan.

Hajdukovich emphasized that the company, established in 1950, is not seeking bankruptcy protection, nor are any of the airline's 185 employees facing layoffs because of the attacks.

The company would use the loan, among other things, to buy five Beech 1900-series aircraft it has been leasing for the past three years. Insurance premiums have increased since the terrorist attacks, Hajdukovich said. If the company were to buy the airplanes it would be able to negotiate better insurance rates, he said.

The Air Transportation Safety and System Stabilization Act, passed by Congress in November, offered $5 billion in direct aid to airlines to cover losses incurred after Sept. 11, and $10 billion in loan guarantees.

Some 266 of the nation's airlines, including about 30 airlines that do business in Alaska, have received $3.8 billion in direct grants. Frontier Flying Service received a $133,589 grant.

In addition to the Fairbanks-based airline, Vanguard Airlines, a small regional airline based in Kansas City, Mo., has applied for $60 million in federal loan guarantees. And Tempe, Ariz.-based America West Airlines, the nation's eighth largest carrier, had a $380 million loan guaranteed in December by federal regulators.

As part of America West's loan guarantee, the company had to offer a third of its common stock to the government, making it one of the airline's largest shareholders.



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