AIRLINES : Braniff Cuts Flights, Trims Work Force by 2,700

Braniff sharply cut its schedule to two only flights Thursday, just hours after filing for Chapter 11 bankruptcy protection from creditors.

The Orlando-based airline said it expected to resume service to Los Angeles Friday, as it expands its schedule to seven flights today and eight flights over the weekend.

The airline sharply reduced its work force to 2,000 from 4,700 and slashed flight destinations to five from 40. It normally had about 250 flights daily.

Braniff Chairman William G. McGee blamed competition from stronger airlines for Braniff’s woes. “Major airlines enjoy a distinct advantage over small carriers in their use of computer reservation systems, frequent flier packages,” and their control of landing rights at airports in New York, Washington and Chicago, he said.

Unsecured Debts

McGee said that Braniff ran low on cash during the last few months and was unable to arrange a $75-million cash infusion. The airline’s finances were also strained by its move from Dallas to Orlando and its $3.5-billion order for 50 Airbus A320 aircraft and options to buy another 50, he said.

Braniff’s quarterly statement showed it had only $3 million in cash at the end of July, while it had current debts of $169.9 million.

In its bankruptcy filing Thursday, Braniff said it had assets totaling $326 million and liabilities of $347.3 million, about $297 million of that unsecured. Among its biggest unsecured creditors are American Airlines, Dalfort Corp., a Dallas firm that formerly owned Braniff and is controlled by Jay A. Pritzker, and the New York investment firm of Drexel Burnham Lambert.

Dalfort said it was owed $15 million for aircraft maintenance work, and a Drexel spokesman said the firm held $15 million in privately placed Braniff debt. American is owed $21.3 million that it loaned to Braniff as part of a deal to lease aircraft.

Despite the airline’s fragile cash position, Leon Foreman, one of Braniff’s bankruptpcy lawyers, said the airline had enough money to meet its pre-bankruptcy payroll.

Action Was a Surprise

For many Braniff employees, this was the second time they had been through the turmoil of a bankruptcy with the company. After an overly ambitious expansion, the airline filed for bankruptcy in May, 1982. It emerged two years later owned by hotel magnate Pritzker, chairman of Hyatt Corp. Pritzker sold all but 10% of his stake to a group led by Philadelphia financier Jeffrey R. Chodorow, whose investments also include a doll manufacturer, and New York real estate investor Arthur G. Cohen.

Cindy Yeast, a spokeswoman for the Assn. of Flight Attendants, said two-thirds of Braniff’s 900 flight attendants had been through the first bankruptcy seven years ago. Though Braniff’s poor financial condition came as no surprise, she said, “no one expected them to act so quickly and so drastically.”

“I feel sorry for the employees who had to go through this twice,” said Howard Putnam, chairman of Braniff during the first bankruptcy. He said employees had taken hefty concessions to get the carrier back on its feet under a five-year agreement that ended in March.

Putnam said he wasn’t surprised by Braniff’s second bankruptcy. “They changed their strategy,” he said. “They moved into Kansas City and Orlando and they became a higher fare carrier. They drove away their passengers or they ran themselves out of cash.”

Airline industry analysts said that Braniff’s new management probably tried to expand too quickly. Analysts said the move to Orlando was costly and could have been put off until the company was more financially secure. In addition, analysts said that while Braniff needed to replenish its aging fleet, the new aircraft added a huge cost.

Customers Calm

“My gut feeling is they tried to do too much too fast,” said Paul Turk, an analyst with Avmark, a Washington aviation consulting firm.

Travel agents said Thursday that Braniff customers took the flight cancellations in stride. “I expected a lot of upset people, but most customers were pretty calm,” said Kimberly Denning, an agent with Ask Mr. Foster agency in Kansas City.

Denning said her employer protected customers by issuing them new tickets on other airlines. A number of airlines, including Continental, American and America West, were honoring Braniff tickets on a stand-by basis.

Time staff writer Robert E. Dallos in New York contributed to this story.