Hannes Richter

Austria's Forgotten Airline

Hannes Richter
Austria's Forgotten Airline

Top photo: A Montana Austria Jet at Vienna International Airport in 1976.
Vienna Airport

 

The story of Austria’s first private intercontinental airline is curiously intertwined with the United States.

by Hannes Richter

Ambitious beginnings

Until the 1970s, national carrier Austrian Airlines, then a state-owned company, fulfilled Austrians’ desire to fly. The airline had a quasi-monopoly in the country but did not offer intercontinental flights at that time. In order to head to different continents, Austrians had to chose a different carrier. This was about to change with the advent of a new airline that arrived on the scene in the 1970s. In 1975, the former Austrian Airlines pilot Hans-Jörg Stöckl founded Montana Flugdienst Gmbh financed by Carl Press of the German shipping company Deugro. Due to his financial backing, Carl Press was the defacto owner of the company. The airline flew under the name Montana Austria and commenced operations in 1976.

Montana Austria saw a demand and a niche for itself and focused on longdistance, intercontinental service out of Austria. The monopolistic competitor Austrian Airlines made sure that the domestic and inter-European destinations it serviced remained off-limits for the startup. Montana’s first regular service was from Vienna to Bangkok via Bagdad, other destinations included Tokyo, Hong Kong, Rio de Janeiro, Mexico City, as well as Anchorage, New York and Los Angeles in the United States. In addition, the airline also offered charter services to numerous destinations, including Colombo or London.

Besides its own passenger service, the company was also active in the freight business and provided services to other airlines through so-called wet leases, meaning the lease included the airplane, crew, maintenance and insurance (also referred to as ACMI). Under this arrangement, Montana also flew for airlines including Aer Lingus (1977 and 1978), Sudan Airways, Nigeria Airways and Alitalia (in 1980 and 1981), among others.

In addition, Montana also opened its own travel agency, Montana Weltreisen (Montana World Tours) and offered charter options to popular destinations, including the Maldives or Mexico.

Airplanes and Crew

Hans-Jörg Stöckl hand-selected most of the crew for his airline, among them Austrian, Swedish and British pilots. Since pilot training for instrument flying in the country was only offered by Austrian Airlines at that time, Montana flight crews were trained by Pan Am in the United States in order to get the necessary type ratings for the planes. Some of the flight attendants came from Austrian Airlines and were trained in Austria.

In the absence of today’s modern training facilities for crewmembers, other solutions were found. The flight attendants, for example, trained ditching at an open air swimming pool at Laaerberg in Vienna, and pilots trained roping from the cockpit with padded mats underneath, according to Hans Löffler, a former captain.

Montana acquired its first plane, a Boeing 707-138B, on September 1, 1976. The plane was delivered to Vienna on October 30, 1976 and was previously in service for Australian airline Qantas. This specific plane was in fact a shortened version of the Boeing 707-120, optimized for increased range and manufactured specifically for Qantas, which required the extra reach due to the geographic location of its home. In this configuration, the 707- 138B offered 120 seats within a one-cabin configuration. The plane was assigned registration number OE-IRA once it commenced service for Montana.

Soon, two more planes were added to the fleet: On July 26, 1977, another Boeing 707-138B arrived; the plane was previously also used by Qantas, as well as by Braniff and was registered in Austria as OE-INA. In 1978, Montana acquired a Boeing 707-396C that was previously in service for Canadian Wardair. It was registered as OE-IDA and offered not only a higher passenger capacity (up to 219 seats) than the two range-optimized 707-138Bs, but also an additional freight door, which enabled it to switch from a passenger to a freight configuration quickly.

The airline initially was well booked during the summer, particularly to popular holiday destinations, including New York. But the company needed to make money in the off-season, too. It was this combination of scheduled service, charter and freight, as well as leased services for other airlines that kept Montana financially afloat. However, the second oil crisis would soon affect Montana’s profitability and ultimately lead to its bankruptcy. This turn of events would not have been out of the ordinary in the airline business or elsewhere, particularly not during a major oil crisis, but it also included one aspect that prominently ties the airline’s fate to the United States.

The Tail Fin of Montana's OE-INA at Vienna International Airport.
Photo: Vienna Airport

Showdown in Texas

The 1979 – 1980 oil crisis put a stop to Montana’s expansion plans; the resulting economic realities forced the airline to abandon several destinations over time; ultimately only New York remained as a passenger destination, while all other capacities were focused on the freight business. In that capacity, OE-IDA was contracted by Servotech, a Liechtenstein-based company, to fly a shipment from the United States to South Africa.

On May 11, 1981, OE-IDA, the larger of the three 707s, flew passengers to New York’s JFK airport. There, a new crew took over and flew the empty plane to Houston, TX, while the old crew headed back to Vienna on an Alia flight. OE-IDA landed in Houston around 10:30am on May 12, 1981 and was scheduled to take on freight and depart the next day to South Africa.

A Montana Austria Plane is being painted.
Photo: Vienna Airport

This was when things took a turn for the worst: Shortly before the scheduled departure, U.S. Customs agents searched the plane and discovered an illegal shipment of weapons totaling 1,486 pieces on board, ranging from assault rifles to grenade launchers worth an estimated $1.5 million. It turned out that U.S. Customs had received a tip regarding an illegal arms shipment from a former border patrol agent turned arms dealer. Some two dozen agents were involved in an undercover operation, posing as truck drivers and ground crew while the weapons were transported to the plane. The cargo was officially bound for Sudan, as was stated in a false end user certificate, but Montana’s management in Vienna confirmed that a flight authorization from Houston to Johannesburg had indeed been received. According to U.S. Customs, the find was the largest amount of military weapons ever seized in the United States.

Apartheid-ruled South Africa at the time was under a 1977 United Nations Security Council arms embargo, which the United States were observing. Attempting to ship weapons to the country was therefore a violation of U.S. law (specifically 22 U.S.C §2778(a) and (b) and 22 C.F.R. 127. 01). As a result, not only the cargo, but the plane itself was confiscated by U.S. authorities. The crew, consisting of Captain Georg Bellamy, First Officer Manfred Stoss, Flight Engineer Peter Lenitz and Technician Heinz Pollani, were arrested together with two British nationals involved in the deal.

What happened?

Servotech, a Liechtenstein-based corporation engaged in the arms trade had contacted Gary Howard, an arms broker for Balotta Trading Establishment (also a Liechtenstein corporation) regarding a weapons purchase in the United States for delivery to Sudan. Howard, according to court documents, contacted U.S. Customs as he was suspicious about the legality of the transaction. As a result of Howard’s phone call, Customs engaged in the undercover operation and teamed one of their special agents with Howard.

In April of 1981, Servotech contacted Howard again in the matter and introduced him to two of its agents, Peter Towers and John Parks, ultimately yielding a deal where Balotta (through Howard) would purchase weapons for Servotech to be exported to South Africa. Soon thereafter, on April 27, 1981, a meeting took place between Howard and the Customs undercover agent, Dan Winkler. During the meeting, which was tape-recorded, Howard explained that a phony end use certificate (showing Sudan as the final destination) would be used for the weapons, thus disguising their true destination.

On May 12, 1981, the weapons arrived at Houston Intercontinental airport and were delivered to Montana’s waiting 707 by undercover agents posing as truck drivers. The plane had been chartered by Servotech, and on May 7, 1981, Montana had sent a telegram to the Civil Aeronautics Board indicating it will fly a cargo of steel fabricates to Khartoum, Sudan on May 12.

On May 11, one day prior to scheduled departure, Montana requested a destination change to Johannesburg, South Africa. To complicate matters further, Montana did not own its 707, but rather leased the plane form German Fg Flugzeugleasing GmbH, a company owned by Carl Press, Montana’s financier. Press was aware of the last-minute destination change request and could prove that he had instructed a representative in Vienna to check the flight documents and exports licenses. The plane’s lease agreement required Montana to abide by all national and international transport laws. The question now to be clarified by the courts was whether the seizure of the plane, being owned by Fg was legal or not.

Subsequent legal proceedings primarily evolved around Servotech. Montana’s (or rather Fg’s) 707 never returned to Vienna, as the plane’s forfeiture was ultimately upheld by the U.S. Court of Appeals for the Fifth Circuit on January 21, 1985. The court argued that a jury had previously concluded that Montana Austria, as the operator of the aircraft, did consent to the illegal act and therefore no exceptions to the forfeiture applied. The plane therefore became the property of the United States Department of Justice, who sold it to the U.S. Air Force for $22,500.

The plane, now registered as 85-6973 was subsequently used as a government VIP transport, also known as Air Force Two. In this role, Montana’s former 707 flew many U.S. dignitaries around the world, including Vice Presidents Al Gore or Dan Quayle, Secretary of State Warren Christopher, Haitian President Jean-Bertrand Aristide, Defense Secretary William Perry, but also then First Lady Hillary Clinton, who used the plane for trips to China, Mongolia, and South America, as well as to The Netherlands. “It once carried guns,” joked Neel Lattimore, Hillary Clinton’s spokesman at the time, when asked about the plane’s past. “Now it is flown by top guns for our country’s big guns.”

Air Force Two, Formerly Montana's OE-IDA, Lands at Valkenburg Naval Air Station, Netherlands, With First Lady Hillary Clinton on Board on February 7, 1999. 
Photo: Joris Termorshuizen

The media also followed up on the plane’s history while it was serving as Air Force Two – “Gore’s jet has a shady past – Air Force Two was a gun smuggler in a previous life” titled the Seattle Times on Sunday, December 3, 1995. As of the year 2000, the former OE-IDA was retired from its use as Air Force Two and entered the next stage in her career: After being used for training E-3 crews, it was remanufactured by Northrop Grumman in Lake Charles, Louisiana in 2003 as a E-8 Joint STARS, a United States Air Force Airborne ground surveillance, battle management and command and control aircraft. To Austrian Information’s knowledge, the aircraft is still in service today as E-8C Joint STARS 00- 2000/GA, based at Robins AFB in Georgia.

Bankruptcy and Aftermath

Montana Austria declared bankruptcy on Friday, July 24, 1981; negotiations regarding a reorganization of the company had failed after financier Carl Press called in the deferred leasing rates for the planes in the amount of 70 million Austrian Schillings (some USD 5.5 million). This increased Montana’s total liabilities (including its travel agency) to some 170 Million Schillings (USD 13.5 million). The bankruptcy left thousands of passengers stranded. Among those affected were some 1,700 passengers in the United States, among them many students, as well as 900 Americans in Austria.

A crisis squad consisting of members of the Austrian foreign ministry, the transportation ministry, the student travel agency Ökista and Montana lawyers was formed to arrange for alternative transportation for the stranded passengers. Those 285 Austrians and 82 Americans who were booked on flights on the weekend immediately after the bankruptcy were flown home using Montana planes, with Carl Press footing the bill. Others were booked on charter planes to Frankfurt through German travel agency Neckermann, while Austrian Airlines offered reduced fares for the connecting flight to Vienna. Those who had booked flights but had not started their journey yet were out of luck, however, those passengers became bankrupt’s creditors. Thus ends the story of an Austrian airline that once provided the only direct passenger service between Austria and the United States.