Arrow Air Inc., the Miami-based carrier whose plane crashed in Gander, Newfoundland, in December killing 246 U.S. Army soliders and eight crew members, yesterday filed for protection from its creditors under federal bankruptcy laws.
The airline said all scheduled passenger service will stop immediately but that it will continue some cargo and charter flights while it attempts to reorganize to pay its debts.
Arrow said, and attorneys involved confirmed, that the filing under Chapter 11 of the 1978 Bankruptcy Reform Act will not affect the air carrier's insurance coverage or potential settlements related to the Gander crash.
The announcement came just three days after the Federal Aviation Administration temporarily grounded 10 of Arrow's 12 airplanes for using unapproved parts.
That action resulted from the third major FAA inspection of the airline in the past two years and was followed immediately by the Air Force's announcement that it was limiting use of Arrow for military charters. The Air Force Military Airlift Command has $20.6 million in contracts with Arrow, including a $7 million add-on that came in January, after the Gander crash.
A House Armed Services subcommittee passed a nonbinding resolution last week suggesting that the Air Force suspend Arrow from military contracts at least until the Gander crash probe is concluded and the FAA completes its investigation of Arrow's compliance with safety regulations.
The Canadian Aviation Safety Board is investigating the crash. According to informed sources, investigators are concentrating on a combination of suspected causes including possible ice on the wings of the aircraft at the time of takeoff and possible overloading or misloading of the plane, a four-engine McDonnell Douglas DC8.
The crash occurred immediately after takeoff. Some aviation experts believe the plane never really became airborne. The runway at Gander is elevated, and the plane's impact with the ground came at an altitude about 150 feet below the runway elevation.
Ice on the wings significantly retards an airplane's ability to fly. Light rain and snow were falling at the time of the takeoff, and the temperature was below freezing. The Arrow crew did not seek or receive de-icing treatment for the plane before taking off, as did crews of some -- but not all -- of the other airplanes using the airport about that time.
If the plane also was overloaded or the weight was distributed improperly, that would have put added stress on the plane's older engines and wings.
Investigators have discounted an early report that the right outboard engine on the four-engine plane unaccountably went into reverse thrust.
However, sources said they still are pursuing the possibility that ground spoilers deployed after the craft became airborne. Ground spoilers are plates on the top of the wings that interrupt the flow of air over the wing and thus make the plane unflyable. The spoilers are supposed to deploy only after landing to assist in braking.
In its bankruptcy filing in Miami, Arrow listed total assets of $14.6 million and liabilities of $31.8 million as of Dec. 31. According to a filing with the Transportation Department, Arrow had net income in 1985 of $229,914 on revenue of $134.7 million.
In a press release, Arrow cited four reasons for the bankruptcy filing:
*"The determination of a congressional committee to prejudge the outcome of the Canadian investigation" into the Gander crash.
*"The unwarranted announcement" by the FAA that Arrow had used unapproved spare parts in maintaining its fleet of 10 DC8s.
*"Adverse news media coverage which seriously affected advance bookings in both scheduled and charter service."
*"Pressure on the Pentagon from Congress to suspend all military contracts with Arrow."
Arrow's abandoned scheduled passenger routes are from New York to San Juan, Puerto Rico; New York to Aguadilla, Puerto Rico; Philadelphia to San Juan, and Miami to San Juan. Other airlines also fly those routes.
Maj. Michael Perini, an Air Force spokesman, said the Air Force is using military transports to replace four of Arrow's flights through Sunday and is seeking a civilian replacement carrier for the service Arrow provides.
"Using contract air carriers is very important in the nation's airlift system for defense," Perini said. "Ninety-five percent of the passengers that we fly during peacetime and we expect to fly during wartime are on civilian air carriers. . . . We fully expect the system of using civil air carriers to continue."