The troubled carrier, which operates eighteen flights a day from Denver, has said it wants to expand and would consider moving its headquarters here if the city can arrange financial support. "Of all the airlines you could bank on as a city, you'd be hard-pressed to find one better to back than this one," says MarkAir director of marketing and advertising Craig Johnson.
But MarkAir emerged from Chapter 11 bankruptcy only four months ago and still owes millions to dozens of private creditors. Its sole owner, businessman Neil Bergt, has fought the Federal Deposit Insurance Corporation over $6.2 million in unpaid bank loans dating from the mid-1980s. And according to John Delano, deputy director of the Alaska Industrial Development and Export Authority (AIDEA), MarkAir is currently more than ninety days delinquent on $10.3 million in loans made by the authority in 1985.
The airline is more than sixty days delinquent, Delano says, on a separate $8.6 million deal made in 1991 in which the AIDEA agreed to buy three hangars from MarkAir and lease them back at $1 million per year for fifteen years. Under a repayment plan approved by a bankruptcy judge this spring, MarkAir was to pay the AIDEA just $600,000 per year for the leases and was required only to make interest payments on the loans, Delano says. The company has failed to do either, he adds.
Delano declines comment on whether offering an incentive package would be a prudent move by Denver officials, who are holding talks with MarkAir and representatives of the Greater Denver Chamber of Commerce. He adds that he has spoken to Denver airport officials about his agency's "current relationship" with MarkAir.
The airline is pursuing a plan to buy new aircraft and add flights. But it has come under fire from competitors for expanding while under the protective umbrella of bankruptcy court.
Denver reportedly is considering putting up as much as $10 million in fuel-tax money as security for private loans to MarkAir. Sources say city officials have appealed to Denver banks' community spirit in encouraging loans to MarkAir. Johnson says he can't comment on specific aspects of the deal, but he adds that his company is "excited" about a possible move. MarkAir, he says, "is determined to pay back every cent it owes."
Johnson says he doesn't know why the airline hasn't met its obligations to AIDEA. "When you hear we're ninety days delinquent, you think that sounds terrible, but if you look at the overall picture of it, I don't you'd find that to be the case," he says, contending that many other airlines don't pay their bills on time.
Despite MarkAir's financial record, Denver officials have touted the airline as a prime candidate to take over gates at Denver International Airport left hanging by Continental Airlines' recent pullout from Denver. Bergt has said that such a move could produce a 3,000-person payroll worth $120 million in economic benefits to the city. "If we have to, we'll change the name to Air Colorado," he said last April. "I don't give a damn." Bergt's secretary said he was unavailable for comment Monday.
One of MarkAir's unsecured creditors says luring the airline to Colorado would be "a terrible idea." Bob Walston, who used to operate a restaurant and flight kitchen in Juneau, Alaska, says the airline owes him more than $100,000 for in-flight meals and has made no effort to pay. "It just frosts me that a small company can take it in the shorts from another company, yet they can expand all over the U.S.," he says. "Then to find that a municipality is offering subsidies to a company that won't pay its bills is very upsetting."
Bankruptcy records indicate that MarkAir lost $5.8 million in the first two months of 1994, but Johnson, who won't release figures, says the airline is now profitable. He does confirm that MarkAir still owes unsecured creditors roughly $12 million. He says he isn't sure how much the airline owes to secured creditors such as Seattle's Seafirst Bank, which reportedly lent it more than $13 million.
Johnson points out that the company recently settled with Alascom Inc., a long-distance phone company that had tried to force MarkAir into Chapter 7 bankruptcy over an unpaid phone bill of $408,000. Under Chapter 7, companies are liquidated and sold off to pay debts. John Ayers, general manager of Alascom, confirms that his company agreed to a MarkAir settlement offer under which the airline agreed to make weekly payments of $25,000. MarkAir had failed to obey two previous orders from a judge to pay up.
Bergt himself took heat last winter when he gave himself an 80 percent raise--from $12,500 per month to $22,500 per month--while the company was still in bankruptcy. Johnson defends the pay hike. "If anyone deserves it, he does," he says of Bergt. "He was in the office every day and didn't have a vacation for three years during that period."
Johnson won't comment, however, on Bergt's long fight with the FDIC.
Michael Jungreis, an Anchorage attorney who represented the federal government in the case, says the federal agency sued Bergt in January 1992 in an attempt to collect $6.2 million; in June the government won a judgment against Bergt.
After attempts to settle the case proved "fruitless," says Jungreis, the FDIC sent four U.S. marshals to Bergt's homes in Alaska and California in the summer of 1993 to seize, among other items, artworks, a Cartier watch and sterling-silver flatware. Jungreis says he believes the items taken from Bergt's home are "still in storage somewhere." Marshals also confiscated an airplane owned by Bergt, he adds.