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Kiwi's relaunch near
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January 8, 1997: 9:01 p.m. ET
Bolstered by new financing, low-cost airline's chief optimistic on future
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NEW YORK (CNNfn) - After being grounded for almost three months and filing for bankruptcy, Newark, N.J.-based Kiwi International Airlines will soon take to the skies again.
Surrounded by the black cloud of financial uncertainty and the fallout from the May crash of a ValuJet Airlines DC-9 in the Florida Everglades, its bookings dropped substantially. There were also questions about its pilot training and safety record.
Those concerns forced Kiwi to seek Chapter 11 bankruptcy protection Sept. 30 and finally forced a shutdown Oct. 15.
This time around, Kiwi officials are optimistic that blue skies are ahead.
Appearing on CNNfn's Who's In Charge, Kiwi's Chief Executive Officer Jerry Murphy said the airline is properly capitalized.
The Federal Aviation Administration is scheduled to begin a review of the carrier this weekend. That process will run through early next week.
Murphy said he is optimistic that all FAA approvals will be granted by the planned Jan. 20 relaunch.
Kiwi has already secured $5 million in financing from The Wasatch Group. Officials are also working on arranging a separate round of financing that will bring between $10 million and $15 million and later, a third round. Murphy said the second and third rounds aren't guaranteed and he doesn't know how much will be sought in the third round yet.
Starting off, Kiwi will operate with seven planes -- although officials are looking at adding newer planes and possibly new aircraft types. The company flies Boeing 747 planes.
The airline will operate in Newark, N.J., Atlanta, West Palm Beach, Fla., and Chicago.
Asked whether the ValuJet was the main reason the carrier was forced to seek bankruptcy protection, Murphy said it did create a perception that low-cost airlines are unsafe. He said that is far from the truth since all carriers are held to the same standards. (220K WAV) or (220K AIFF)
"Safety is not something that airlines like to talk about. When you're characterized as unsafe, you have to dispute that.
"We have a perfect safety record. Our pilots have an average of 24 or 25 years of experience. That's higher than the majors."
Murphy said Kiwi will maintain the same low-fare structure that it operated under before its shutdown. He said that will good for customers since fares in the markets it served have doubled, and in some cases tripled, since it stopped flying.
"The markets we're serving are business markets. Flying from Newark to Atlanta will cost $184 on Kiwi versus $407 on one of the major carriers.
"Consumers will benefit and (chief financial officers) need to look at what they're paying the major airlines," he said.
Murphy predicted other carriers will match the fares, but will probably only offer a limited number of seats.
"We believe it's unfair for the consumer to pay those fare levels. It's a very competitive market. We are not a dominant player in any of these markets. What we offer is superior service at an affordable fare."
Prior to its shutdown, Kiwi employed about 1,200 people. Murphy said about 80 were kept on during the reorganization process. The number of employees will grow to 450 or 500 once service resumes.
"As we continue to add cities, we'll increase. I envision adding two new cities before the end of the year and going to nine or 10 airplanes," he said.
Murphy estimates it will take between six and nine months for the company to formulate a plan to emerge from bankruptcy and have that plan reviewed by creditors.
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