Financial Problems Ground 2-Week-Old Carrier

Feb. 8 -- BELLINGHAM, Wash. -- Western Airlines Inc.'s financial problems have been caused by a glitch in credit card payments, and the air service expects to resume regular flights as soon as the problem can be resolved, officials said Wednesday.

But Curt Tronsdal, Western's chairman and founder, said it could be as late as Monday before Western is able to announce when service will resume from Bellingham to San Diego, Mesa, Ariz., and Ontario International Airport outside Los Angeles.

A shortage of cash forced the shutdown of Western service Wednesday after less than two weeks of operation. Xtra Airways, which operates the flights under a lease agreement with Western, is returning Western's customers to their cities of origin, but area residents who have tickets on departing flights over the next few days are out of luck.

"We apologize to the community," Tronsdal said. "We didn't see this coming, and we're going to get back in the air as soon as possible."

As he explained it, Western has been getting none of the revenue from credit card ticket purchases. The air service has been selling tickets since November, but because the company has been unable to obtain a merchant identification number, credit card companies have not been willing to deposit payments into Western's account.

Chief Financial Officer Joseph Goss said most businesses can get the identification number within hours, but arranging it for an air service has proved more difficult and time-consuming than anticipated.

"We've been expecting it for two months and it's been a nightmare," Tronsdal said.

Goss and Tronsdal said they expect to be able to resolve the matter shortly by working with Pay Pal, the online bill payment service. Goss said Western is working out an arrangement in which Pay Pal will handle credit card authorization for Western customers who contact the air service via phone or Web site, enabling the air service to be paid even without a merchant identification number.

Tronsdal said he spent most of Wednesday discussing the situation with airline shareholders and other potential sources of the capital Western would need to

get back in business after its false start.

In the meantime, many Western employees put in long hours Tuesday and Wednesday giving bad news to customers who had been expecting to use the new direct air service in the next few days.

"I am so sorry," employee Heather Haan said every time she picked up her constantly ringing phone. "Yes, unfortunately it is true."

She and other employees handling customer calls were also reassuring people that their credit cards would not be charged, and were asking their would-be customers not to lose faith.

"We'll be here," she said. "We're not going anywhere ... I can't give a date. It's just temporary."

Art Choat, the Port of Bellingham's director of aviation, said Western's troubles took him and other port officials by surprise. He said Western submitted financial statements before the port agreed to lease airport office space to the firm in late 2005.

"The financial data was weak because it was a start-up, but it looked plausible," Choat said. "Western was a tenant of ours in good stead for 14 months. ... Then they started flying and things unraveled."

Choat added that he had been impressed by the qualifications of Jerry Welch, Western's president, and other people on the Western team. Welch is owner of Commercial Aircraft Interiors of Burlington.

Choat said he hopes Western can make good on its pledges to resume flights, but he observed that it will be a challenge to get people to make travel plans that depend on Western, after this week's sudden shutdown.

"They've blown it now," Choat said. "That would be a hard public relations nut to crack. I'm not suggesting it's insurmountable."

Western executives aren't minimizing the challenges.

"We just hope Bellingham will continue to support us," said Jay Van Buskirk, a company vice president. "We know it's kind of hard at this point."

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