MAXjet is maxed out on debt
TEXT OF STORY
AMY SCOTT: Passengers on MAXjet Airways are stuck trying to hitch a ride with Santa tonight. Earlier today, the airline built for business-class filed for Chapter 11 bankruptcy protection, leaving some passengers stranded on Christmas Eve. Nancy Marshall Genzer takes a look at what sent the airline into freefall.
MAX JET AIRWAYS RECORDING: You’ve reached MAXjet airways. A representative will be with you shortly.
NANCY MARSHALL GENZER: They’re still answering the phone at MAXjet. The airline wouldn’t give an interivew but has an apology on it website. Aviation analyst Richard Aboulafia says high fuel prices and stiff competition grounded the airline.
RICHARD ABOULAFIA: Business travelers aren’t just paying for a nice seat and a good meal. They’re also paying for the ability to fly when they want to fly. That means if you can offer two or three flights a day, you have a strong advantage there.
American Airlines went head to head with MAXjet. Two months ago, it started service from JFK to London’s Stansted Airport. MAXjet took a nosedive when it couldn’t get a loan. Now, the airline is spending what money it has helping passengers. The soothing voice at its toll-free number promises full refunds and…
MAX JET AIRWAYS RECORDING: If you have started your travels with us, MAXjet is working to secure alternative flight accommodations.
MAXjet says it’s also prepaid for 450 hotel rooms. But why bother if you’re going out of business? University of Portland Finance Professor Richard Gritta says MAXjet may try to reorganize and needs loyal passengers.
RICHARD GRITTA: That may be their motive, to try to get these people back so that, “Look, we filed because we had to but we’re trying to get you home. And if we reorganize, we want you to remember that we did the best we could for you.
But Gritta says it would be awfully hard for MAXjet to raise new cash in the current credit crunch.
In Washington, I’m Nancy Marshall Genzer for Marketplace.
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