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Western Alaska airline hopes to stage comeback after years of turbulence

BETHEL -- It's been a rough ride in recent years for a rural airline that once dominated the Western Alaska market.

Grant Aviation, company executives say, was unprepared for new routes it picked up three years ago in the Aleutian Islands and Bristol Bay area. At the time, it was just emerging from a bitter court fight over management and ownership. It canceled many flights. Employee paychecks bounced. Its Anchorage landlord started eviction proceedings on its Lake Hood hangar and office space -- three years in a row.

Many passengers gave up on the airline they once relied on to get to the doctor, stock up on groceries and travel to high school basketball games.

Now Grant says it's retooling itself. It is adding planes, including an Australian-built Airvan. In April it opened a Bethel customer service center with agents who speak Yup'ik.

And the air carrier installed a new management team. Executives and owners are traveling throughout rural Alaska holding town hall meetings with free food and door prizes including plane tickets to promote what they hope is a new day for Grant.

"Many of you call us 'Can't Air,' which is tough," the new company president, Bob Lowrance, told a crowd in the airline's Bethel hangar during a town hall last month. "I guess it's better than being called 'Mean Air.' It's still not what we want to be known as."

Lowrance told the audience that Grant "has a full commitment to restoring service to Bethel."

At its peak in 2008, Grant claimed more than half the market for Bethel and surrounding villages, the company says. By last fall, it was down to 10 percent. It's creeping back up to 15 percent.

"It's very important to us that if you have a ticket, we fly," Lowrance said.

Weather permitting, that is. Even at the worst of it, Lowrance said in an interview, Grant was focused on safety.

"We've gone over 16 years without a passenger fatality."

Grant's troubled time isn't unusual in an industry that operates on thin profit margins. Costs are high, canceled flights mean lost revenue and government rules increasingly get tougher. Many small carriers and worldwide airlines alike go under, combine with stronger companies or claw their way to survival through bankruptcy reorganization.

"The joke is 'How do you get a net worth of $1 million in an airline? Start with $2 million,'" said John Parrott, manager of Stevens Anchorage International Airport.

Alaskans have seen airlines come and go: Cape Smythe, MarkAir, Reeve Aleutian Airways, Wien Air Alaska.

Grant started small in 1971 as the Hooper Bay-based Delta Air Service. By the mid-1980s, Mark Hiekel, a pilot, had bought the air taxi and charter business and based it in Emmonak. The name referred to the region -- the Yukon-Kuskokwim Delta -- and big Delta Airlines eventually forced a new name. Hiekel, who now is retired and at last word living in Thailand and sailing the Indian Ocean, picked that of his son, Grant.

Twenty years after it started, Grant began offering scheduled passenger service between Emmonak and Bethel with flag stops at villages along the way. Then in 1994, it landed the big prize: U.S. Department of Transportation authorization to haul mail as a commuter airline.

Make that mail freight, including soda, chips and fresh produce, none of which ever goes through the regular U.S. Postal Service. The federal bypass mail program, started and reformed by the late Sen. Ted Stevens, heavily subsidizes Bush passenger service. Some 30 percent of Grant's revenue comes from mail, mainly the mail freight, according to the company.

With that approval in hand, Grant grew fast. It now operates scheduled flights to 60 rural villages and hubs, plus charter trips to others, the company says.

Inner turmoil

In 2004, Bruce McGlasson -- already a minority partner and longtime employee -- and two other Grant employees bought the company outright. McGlasson, chief executive officer, and board chairman Mark Richardson now are 50-50 owners. Grant is one of a few Alaska airlines still owned by Alaskans.

The third owner, Jeff Taggart, left his job as chief financial officer in 2010 during bitter infighting that erupted with claims and counterclaims in court. Lawsuits were settled. In 2014, Taggart was bought out and no longer has an ownership stake, according to Grant.

Grant's leaders emphasize its overall safe record. Still, a pilot was killed in a 2011 mid-air crash that the National Transportation Safety Board blamed on pilot error. Scott Veal was flying alone from Toksook Bay back to Grant's Bethel base when his empty plane collided with that of another pilot. He crashed; the other pilot, a woman also flying solo, was able to land.

Grant still is trying to resolve a lawsuit filed by a doctor who says she was injured after landing gear failed to deploy in Dillingham during a forced rough landing in April 2012.

Just as the legal battle over ownership and management was settling down in 2012, Grant seized on an unexpected expansion opportunity. Competitor PenAir decided to give up its small plane routes to villages along the Aleutian chain and in the Bristol Bay region so it could concentrate on bigger markets.

Grant acquired about 20 new village routes with scheduled service, along with charters, leased hangars and equipment, McGlasson, the chief executive, said. But it didn't take over PenAir's planes.

The quick plunge into new territory quickly overwhelmed the small carrier.

"Grant was not ready," Lowrance, the company president, said. "We didn't have the leadership in place. We didn't have the financial resources. We didn't have the equipment, the number of planes to basically fill the shoes of PenAir leaving."

Creditors began taking Grant to court. The cities of Homer and Kenai sued in 2013 over unpaid rent. Grant closed its Homer and Valdez bases. The owner of its Lake Hood hangar started eviction proceedings in 2012 and again each of the next two years.

Then the turnaround began. Grant worked out a deal with its Lake Hood landlord.

"It is very, very difficult to do what they are doing in the business they are in," said the hangar owner, Steve Zelener. "They are survivors."

'Get things working'

Enter the new crew.

Lowrance has worked 15 years as a consultant or interim executive for struggling companies, according to his work biography. Last August, Lowrance became president and chief operating officer of Grant. He quickly installed a new management team that includes former Sen. Mark Begich as a community relations consultant. One of Begich's former aides, Schawna Thoma, is working as a Grant vice president.

"If this company is unable to survive, the overall transportation cost for people living in Western Alaska and along the Aleutian chain will go up," Begich said. "There's no two ways about it."

Grant is trying to become more efficient, executives said. It wants to travel to more villages, lower rates if it can and expand its participation in a federal subsidy program called Essential Air Service.

Grant, with new financing in hand, is spending $2 million to $3 million to bolster its fleet and make other needed improvements, McGlasson said. The company's annual revenues have gone from $13 million at the time of the 2004 purchase to $32 million, he said.

In the fall of 2014, Grant had just four planes based in Bethel. By the end of April, the count had doubled to eight. It soon will have 14, Lowrance said. In all, Grant is growing from a fleet of 22 planes as of this spring to an expected 32 by year's end.

At the Bethel community meeting last month, Grant's new acquisition, the Australian-built GippsAero GA8 Airvan, was on display. Children climbed inside. The traditional chief of Bethel's tribe blessed it. An elementary school group did a crane dance. A rock band played.

"Tonight is really about thanking all of you who stuck with us during difficult times," Lowrance told the crowd. "And just to let you know we're listening and we're going to do better."

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