By Joel Warner
By Michael Roberts
By Alan Prendergast
By Michael Roberts
By Michael Roberts
By Amber Taufen
By Patricia Calhoun
By William Breathes
Westpac is hoping that Smith will come to its rescue by tossing another $20 million down the rathole sometime in the next few days. But Smith is under no obligation to do that--in fact, it has retained the right to simply open the cargo doors and jump out, a la skyjacker D.B. Cooper, protected by a golden parachute that includes a "superpriority" position granted to it by Brooks. That "superpriority" position gives Smith the right to collect its $10 million before any of the other creditors get their money back--including aircraft lessors who've been forced by Brooks to let Westpac keep flying their planes even though they haven't been paid.
"If for some reason there's a meltdown and you take all the assets and turn them into cash and pay Smith back, the question is, is there anything left?" asks Duncan Barber, an attorney representing Babcock and Brown, a leasing company that owns two of Westpac's 737s. "They're in first position for the whole $10 million, including interest and attorneys' fees."
Given Westpac's negative net worth and low number of post-holiday bookings, other creditors shouldn't count on getting anything for Christmas other than a lump of coal with a thank-you card from Peiser attached. But the thinking seems to be that since everyone's screwed anyway, they may as well roll the dice and let the Smith gambit play out. "My gut level on the whole thing is that the judge, I think correctly from his perspective, jumped at the only thing that would keep the airline going in the near term," says Boyd. "It's like the English bulldog theory: The bulldog can't worry about anything but getting its next breath."
Boyd says Westpac needs a fundamental change in management strategy if it's to have any chance of pulling out of its death spiral. However, that doesn't seem likely given the apparently cozy relationship that Peiser--who spent part of his time on the witness stand last Wednesday in Courtroom E bragging about his "network" of big-money connections--enjoys with the crew at Smith. It was only after Peiser moved the airline to Denver from Colorado Springs last summer that Westpac really started hemorrhaging cash--$21 million in the third quarter alone--but there's no sign that Smith plans to back away from Peiser's vision of Westpac as the Southwest Airlines of Denver, sending fleets of planes out nose-to-nose with United. Hometown carrier Frontier was doing relatively well with its lower-profile approach--fewer planes, fewer flights--until Westpac arrived to give it competition. Now both carriers are losing money. "Westpac is wedded to trying to be a 100-flights-a-day airline in Denver, and that's impossible with United," notes Boyd. "We had one of those once--it's called Continental." Adds the consultant, "It's like the Titanic after it hit the iceberg. It's still a mathematical certainty this sucker's going down. I hope I'm wrong. But I can't see how they can generate enough revenue in the dead of winter to survive."
Ironically, considering all the hoopla about Westpac's low fares, the main reason Peiser moved to Denver in the first place was so he could charge higher rates. Instead, notes Boyd, "he jumped from the frying pan into the rotisserie."
Meanwhile, there's this rosy bit of news: Westpac still owes DIA--which not so long ago was talking about giving it a $5.5 million taxpayer subsidy--about $6 million in pre-bankruptcy gate rentals and landing fees. Which means that if the carrier crashes, everybody gets to help cover its losses--possibly through higher ticket prices. Happy holidays, Smilin' Bob!
The honor bar: Three months ago Denver City Attorney Dan Muse was downright gallant in defending the hefty legal bills of private attorney Anne McGihon, who'd been retained to represent the city's interests in a tangled sex-discrimination suit filed by police officer Miriam Reed. (Among other things, Reed claims she was demoted because she supported former councilwoman Mary DeGroot rather than Wellington Webb in the 1995 mayoral race.) At the time, Muse insisted that the hiring of McGihon, a local Democratic Party activist, was prompted by an attorney shortage in his employment-law division rather than political concerns and that it would be "unfair" to remove her from the case just because her firm's bills--in excess of $350,000 at that point--had already exceeded the city funds budgeted for the case for the entire year ("The People's Hired Gun," September 18). "I'm honor-bound as a matter of law and personal integrity to let that person handle the case," Muse told our intrepid reporter. "As long as she handles this lawsuit to my satisfaction, she'll continue to handle the lawsuit for the next five years if necessary."
But the grousing about McGihon's legal fees--first reported in Westword--just kept getting louder as the months dragged on. Last week, only days after Denver City Council reluctantly approved another $197,000 in fees, McGihon's firm was unceremoniously removed from the case; Muse's office reportedly will handle it from here on out.
Which means no more Democratic milkmaids squeezing this cash cow.
Who's on first?: Until this week, Guion S. Bluford Jr. was officially the country's first black astronaut. But on Monday, Major Robert Lawrence Jr., who died in a training flight in 1967 before he could ever blast off into space, was elevated to that honor. And where does that leave local sculptor and former Air Force test pilot Ed Dwight, who's often billed as "America's first black astronaut"? (See, for example, the Web page for the Black Patriots Memorial, which Dwight was commissioned to create.) Back where he was in 1961, as the first black accepted into the astronaut-training program. Dwight, however, failed to make the final cut.