Markair Flies Into Bankruptcy Cloud

ANCHORAGE, Alaska - MarkAir Inc., the Anchorage-based airline that last year announced it would compete head-to-head with Alaska Airlines, has filed for Chapter 11 bankruptcy protection.

MarkAir said it would keep its airline schedule and meet payroll while it sought protection from creditors.

The company filed for bankruptcy protection yesterday along with MarkAir Express, its package-handling company.

With a combined work force of around 1,200, MarkAir and MarkAir Express accounted for about one of every five Alaskans employed in the air transportation industry, state figures showed.

Larry Anderson, MarkAir's vice president for sales, said yesterday the company would use the protection of Chapter 11 proceedings to trim costs, search for new investment and eliminate certain redundancies at MarkAir and MarkAir Express.

Anderson said he did not envision layoffs.

"The (bankruptcy) laws are in place to give a company the chance to strengthen itself so that it can honor its obligations," Anderson said. "That's the full intent of MarkAir."

Three major airlines, AmericaWest, Continental and TWA, are flying while under Chapter 11 protection.

Neil Bergt, MarkAir's owner, was out of state on other business yesterday and not immediately available for comment, Anderson said.

Alaska Airlines said it had no immediate plans to alter its operations based on MarkAir's new status, a spokesman said.

Papers filed in federal bankruptcy court here show MarkAir, which has sold assets to underwrite costs of its new competition, had $210 million in assets and $195 million in liabilities as of April 30.

MarkAir Express reported assets of $12 million and liabilities of some $14 million.

MarkAir estimated it owed approximately $187 million to more than 60,000 creditors, ranging from an Anchorage high-school newspaper to Boeing Commercial Airplane Co.

The company also said it owed $3 million to the Internal Revenue Service in excise tax on airlines tickets. The IRS was MarkAir's top creditor.

MarkAir Express said it had more than 400 creditors and owed approximately $14 million.

MarkAir and Alaska have been locked in a sometimes bitter fare war since the fall when MarkAir announced it would compete for lucrative routes to Juneau and Seattle.

MarkAir last month announced it would pull out of the Southeast Alaska market.

Mike Maehl, manager for the Anchorage branch of Kemper Securities, said yesterday the airline's decision to quit flying to Juneau and other newly added Southeast cities was a signal of trouble ahead.

"A lot of people were thinking this may be the next step," Maehl said.

Until the newfound competitiveness last year, MarkAir, which serves about 140 Alaska communities, had ticketing agreements on some flights with Alaska Airlines.

MarkAir lost $4.2 million in the last quarter of 1991 but reported a year-end profit of $3.1 million, U.S. Department of Transportation reports show.

MarkAir also faces a suit from the Federal Deposit Insurance Corp. over $6.3 million in overdue loans and back interest.