Word: laker
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...bound for Miami from Manchester, England, were stunned to hear over a loudspeaker that their flight had been canceled. An Airbus A300, already airborne toward Tenerife, reversed course and flew back to Manchester. At London's Gatwick Airport, stewardesses and ticket agents openly wept. Sir Freddie Laker, the swashbuckling British entrepreneur who had revolutionized transatlantic travel by slashing air fares, had abruptly announced that he was liquidating his debt-laden airline. Said one Laker counter attendant: "It's hit everyone, mate-like a smack in the mouth...
...price war is only the latest in a series of headaches for Laker, and the outspoken Sir Freddie has begun to sound as cranky and befuddled as many of the competitors he undercut to get a share of the North Atlantic route four years ago. Sniped he of the Pan Am action: "It is nothing less than suicidal marketing that could endanger the fabric of the airline industry as a whole...
...Laker's immediate problems are financial, and they have been sharpened by the yearlong rise of the dollar and the fall of British sterling on the world's money markets. For months, Laker has been seeking extra time to repay loans he took out to buy DC 10s and European-made Airbus A300s for his fleet. Included in the debts are $160 million in direct and guaranteed loans from the Export-Import Bank, and $131 million borrowed last January from a syndicate of 14 European and North American banks. His reason for seeking the extension: to avoid having...
...Laker based his 1981 air fares on bank forecasts that the pound would be worth an average of approximately $2.25 in U.S. dollars this year. In fact, the decline of sterling has by now pushed the rate to about $1.82 to the pound, forcing his costs up sharply. Says he: "The Reagan and Thatcher governments have screwed up the world's monetary system and I am in the middle...
...Laker has already received two 30-day extensions on loans guaranteed by the Eximbank, and other lenders are expected to give the firm at least some easing of terms. Throughout the negotiations, Laker has insisted that he can come up with the money, if necessary, by dipping into company reserves. Although scheduled aircraft serving the North Atlantic run have been flying about two-thirds full on average, Laker Airways has been a consistent moneymaker since the company's founding in 1966. Last week a Laker spokesman dismissed the possibility that the airline would soon be forced to raise fares...