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National Airlines Celebrates First Year, Turned Profit After Only 10 Months

National Airlines became profitable 10 months after its inaugural flight, nearly unheard of in an industry with high overhead and capital expenses.

That doesn't surprise airline expert Mike Boyd of the Evergreen, Colo.-based Boyd Group, who said most start-ups are doomed before the first plane leaves the gate.

"Most start-ups have a dream business plan," Boyd said. "The business plan is a bible they worship in the dark with votive candles burning everywhere."

But that hasn't been the case for Las Vegas-based National, which started its second year of operation Saturday.

"They aren't your typical start-up," Boyd said. "National is one of the very few that had a clear plan of operation years before the first flight."

That plan, engineered by National's founder, Mike Conway, included developing a hub-and-spoke flight operation from Las Vegas. That means every National flight either leaves or arrives at McCarran.

The plan also included raising more than $48.5 million in capital -- most of it invested by the Rio hotel-casino and Harrah's Entertainment Inc., which have merged since National's launch.

Conway also planned developing a fleet of Boeing 757 jets -- a twin-engine aircraft versatile enough that it could be used on short hops from Las Vegas to Los Angeles as well as cross-country hauls to New York. National configures its planes to carry 153 passengers in the main cabin and 22 in the first-class section.

National launched service with a flight to Los Angeles International Airport on May 27, 1999, and initially used two planes to carry customers to Chicago's Midway Airport, Los Angeles and San Francisco. When new planes were delivered, the airline quickly added New York's John F. Kennedy International Airport to the schedule. Today, the company serves eight cities, including Las Vegas, and will add Newark, N.J., in July.

Conway won't discuss specifics about the company's profitability, other than to say that April's numbers were even better than March's and he expects May to be even better than April.

Profits would have been even greater had the price of fuel not gone up to a nine-year high earlier this year. Conway said fuel costs were 35 to 50 percent higher than projected.

The biggest reason for National's early profitability is that passenger loads have begun exceeding the break-even point on a regular basis. Conway won't disclose the loads, but break-even is in the 60 to 65 percent range. The airline carried its 1 millionth passenger in April.

Turning a profit was one of the biggest accomplishments for National, Conway said, but he has a long list of first-year highlights.

"Picking up the first airplane in England was very significant, but bringing it into McCarran with all the fanfare and getting that first picture with all our employees with the plane was very satisfying," Conway said from the airline's corporate offices on Spencer Street, just off McCarran's northern perimeter.

National, which will add its 15th jet next month, has acquired about half of its planes through expired leases from other carriers and the other half brand new off the Boeing assembly line. National's senior vice president of aircraft acquisition, Tom Milligan, monitors leases on Boeing 757 jets all over the world so that the airline can move on lease expirations.

Conway said the graduation of the first class of pilots, inflight attendants and customer service representatives through the National system was significant, but what may be more significant is that he says turnover within the company is "almost nonexistent."

The company now has 1,240 employees, most of them based in Las Vegas. Conway said the company works in an environment of team players that are disappointed when they don't achieve perfection. His definition of the best airline in the world is one that is a great place to work, achieves results for its investors, is superior in industry benchmarks, delivers on the expectations it creates for its customers and is clearly the top choice among passengers when they have a choice.

But right now, Conway doesn't think any airline -- including his -- is clearly above everybody else.

"There are several airlines that I admire, including some competitors," Conway said. "But I don't think anyone is clearly head and shoulders above everyone else in every category."

Conway also said he is happy that Las Vegas has embraced National as a hometown airline and he said as word about the company spreads, he gets more loyal customers in other cities. The company is starting to get enough of a following, he said, that some cities are asking National to serve them.

Conway said service to New York has far exceeded the company's expectations and hopes are high for Newark flights, since the company doesn't expect to have to spend as much to ramp up that service since many New Yorkers will already know about National. The Newark airport is just outside New York City.

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