FAA challenges Great Plains' certificate sale

Thursday, October 14th 2004, 6:22 am
By: News On 6

TULSA, Okla. (AP) _ Federal aviation regulators are challenging Great Plains Airlines' attempt to salvage its bankruptcy reorganization through the sale of its valuable flight certificate and operating manuals.

In a court filing Wednesday, the Federal Aviation Administration said the airline cannot sell them because it is no longer qualified to hold a certificate, which authorizes an airline to fly passengers.

Great Plains revealed Oct. 4 that it is negotiating with one of two potential buyers of the FAA-issued flight certificate and related manuals, assets the carrier believes ``may have considerable value.''

The negotiations bought the Tulsa-based carrier, which hasn't flown since February, more time before the U.S. trustee will ask the bankruptcy judge to order the liquidation of its assets to pay off creditors.

Neither Great Plains' chairman David Johnson nor its attorney Sid Swinson immediately returned a phone call seeking comment.

Great Plains filed for Chapter 11 bankruptcy in January after nearly three years of profitless operation. Creditors have repossessed all five of its aircraft and its scheduled and charter flights have been canceled.

Great Plains began flying in 2001 with $27 million in state tax credits and loans backed by the city of Tulsa to fill a void of direct flights from Oklahoma City and Tulsa to business centers on the coasts.

But the airline served only regional cities until August 2003 when a $750,000 loan from St. Clair County, Ill., allowed it to lease three prop jets and add flights there and to Chicago and Washington D.C.

FAA-issued flight certificates are not transferrable, but bankrupt airlines often sell them to investors buying the entire airline. The buyer gains by bypassing some of the regulatory procedures required to get a certificate from scratch, analysts say.

Great Plains said in a filing Sept. 24 that it was seeking to sell the certificate as part of a deal that would transfer all of the airline's stock to a buyer.

The U.S. trustee, Mary May, said in her status report filed Oct. 4 that Great Plains has received an offer of $400,000 to buy the certificate and certain aircraft parts.

But the FAA said Great Plains no longer meets the requirements for a certificate and has voluntarily handed its certificate over to the FAA for deposit while it seeks financing to resume operations.

Airlines must have aircraft, certain management and technical personnel ensuring safety and a separate U.S. Department of Transportation certificate to qualify. Great Plains no longer has any of those, the FAA said.

``The statements made ... with respect to the FAA air carrier operating certificate are misleading,'' the FAA said in a filing made by assistant U.S. Attorney Phil Pinnell.