Tulsa World: November 2004 Archives

The Tulsa Whirled was in full spin mode this weekend in response to the release of the City Council's preliminary investigation into Tulsa airports and the Great Plains Airlines mess, which has the city on the hook for millions of dollars. Let's look at their Saturday editorial defense of parent company World Publishing Co.'s investment in Great Plains:

Mark Twain's wisdom suggests that a lie told about the World Publishing Co.'s interest in the ill-fated Great Plains Airline will be repeated so much by shrill voices in Tulsa that the truth could be lost.

First, the lie: The City Council's investigator, paid $40,000 so far to amass public records, used out-of-date documents to claim the World holds 51 percent equity in the bankrupt airline.

The fact: The final list of stockholders, published elsewhere in the World Saturday, shows that the World owned 3 percent of the airline stock.

Notice the sleight of hand -- the Whirled responds to the fact that it had invested 51% of the private investment in Great Plains Airlines by saying it only owned 3% of the total number of shares of stock. The Whirled is deliberately confusing preferred stock with common stock. In November 2000, World Publishing Co. acquired 233,333 shares of preferred stock for $700,000 -- $3 per share. That's 3,000 times the cost of a share of common stock, which generally went for one-thousandth of a dollar per share. (Some common stock was sold for a nickel a share.) Preferred shares bring greater rights, such as first cut of any dividends. The exact distinction between preferred stock and common stock for a company is defined by the shareholder agreement, which does not appear to be one of the documents released to the City Council investigation. If the the Whirled wants to persuade us that its investment was insignificant, they'll need to show us the shareholder agreement.

As to the "out-of-date" document claim: The City Council's investigator used the latest shareholder list that was provided to it, from February 2001. Only one more investor of any significance came in after that date: Dr. William E. ("Wes") Stricker, the Columbia, Mo., allergist and owner of Ozark Air Lines. Stricker acquired 250,000 shares of preferred stock when Ozark was purchased by Great Plains in March 2001.

Shortly after the Whirled acquisition of Great Plains stock in November 2000, the Whirled editorial board, on November 28, urged the City Council to agree to mortgage Air Force Plant No. 3 to enable a total of $30 million in financing ($15 million in state tax credits, $15 million loan secured by the property). The editorial claimed that the airline would "over the next decade, create 2,000 new jobs and generate $23 million in revenue to the Tulsa Airport Authority. It represents a tremendous private-public partnership to solve a problem, offer a needed service and boost economic development opportunities." The Whirled editorial made no mention of the launch on November 1 of daily non-stop service from Tulsa to Los Angeles on American Airlines, which undercut the need for the niche Great Plains was meant to fill. There was no mention, either, of the failure a year earlier of AccessAir, another airline which had been heavily subsidized by state and local governments to provide service from the midwest to the coasts. There were plenty of reasons to be skeptical, but the Whirled, owner of a majority of preferred stock at that critical moment, didn't let the public know.

More rebuttal after the jump.