Air 21 Chances Called Dim After Chapter 11 Filing

The future is cloudy for troubled commuter airline Air 21, analysts said Tuesday upon learning that the Fresno-based carrier has filed for Chapter 11 bankruptcy protection.

Only 5% of all airlines successfully reorganize under Chapter 11, said Michael Lowry, president of Aviation Forecasting & Economics Inc. of Lake Oswego, Ore., adding, “When you don’t have a lot of money to begin with, it’s a formula for disaster.”

Air 21’s troubles stem from several factors, analysts said, including a lack of capital, a six-month delay in starting operations, extremely low fares, overstaffing, rising fuel prices and the high-risk stigma the ValuJet crash cast on small, low-fare airlines.

Air 21’s lone remaining director, Gottschalks department store mogul Joe Levy, expressed confidence the airline can be revived. “I’m not trying to build hopes up, but there remains a lot of enthusiasm for Air 21. We’re working on a plan to minimize liabilities for someone who might want to come in” with new investment money.

One potential investor, San Diego investment banker David Walsh, apparently backed out of a potential deal last month, according to analyst Philip Roberts, chairman of Roberts, Roach & Associates, a transportation consulting company in Hayward. Walsh did not return several calls seeking comment.

The airline, which flew three leased planes, filed Monday for Chapter 11 protection. The company reportedly has laid off all 180 of its employees.

Callers to the airline’s public relations department Tuesday heard the following message:

“This message was made on Dec. 31, 1996. The offices of Air 21, including the public relations department, are now closed. At this time, there are no employees at Air 21.”

*

Associated Press contributed to this report.