From the WSJ ...


Military cargo airline Southern Air Inc. filed for bankruptcy protection Friday with its revenue plummeting as the U.S. withdraws its forces from Afghanistan.

Southern Air Inc.'s parent company filed for Chapter 11 protection in Delaware, blaming its financial woes on the decline in business from the U.S. Department of Defense, which reduced its troop count in Afghanistan and hired Southern Air less frequently.

The carrier says its fleet of 11 jets is under used, and it plans to reorganize its operations around another arm of its business: its cargo-moving operations for DHL Worldwide.

Its government business, which makes up more than 40% of Southern Air's revenue, has fallen throughout the year. Its government-related revenue in the second quarter was $44.9 million, 34% less than company executives expected, according to court papers filed in U.S. Bankruptcy Court in Wilmington, Del.

The hit was harder to take with the pain from its commercial business that has strained under a "stagnant international freight market, a direct result of the worst global economy in decades and a generally negative economic outlook," said Chief Executive Daniel McHugh in court papers.

This year will likely mark the fifth year in a row in which the company will see no growth in demand for its air-cargo services, he added.

For the 12 months ended July 31, the company reported revenue of about $428.2 million and a net loss of $159.8 million, according to court papers.

Despite the slower times, Southern Air still had to make "above-market" lease payments on its fleet of Boeing cargo jets. The company said it will use its bankruptcy case to renegotiate its lease agreements and continue to downsize its operations—moves that will likely cause the company to continue cutting its roster of 611 workers.

The company said it has an agreement to borrow a $25 million bankruptcy loan to spend throughout the case. That spending will first need approval from its bankruptcy judge, Christopher S. Sontchi.

Southern Air follows fellow military transporter Global Aviation Holdings Inc., which filed for bankruptcy earlier this year, into Chapter 11. Global Aviation also cited the hit to its business from the withdrawal of troops from Iraq and Afghanistan.

The company is privately held. In 2007, an affiliate of private-equity firm Oak Hill Capital Partners bought majority ownership of Southern Air, which traced its roots to Miami in 1947.

At the same time as the purchase, Canadian Imperial Bank of Commerce CM.T*-0.41% agreed to extend $300 million in loans. As of the bankruptcy, the airline estimated that it owed about $288 million in secured financing obligations and about $31.1 million in trade debt.

As of July 31, the company said its assets were worth $206.9 million, but that its liabilities topped $485 million.

Had a bunch of guys I've flown with when I was a Custom Air Trasnport. Hope they find greener pastures should SAT tank. Many opportunities in Asia for 747 Classic pilots as well as 777s. So there is a possibility of life with better pay after SAT.

I guess I better start brushing up on my Cantonese / Manderin!

Just piling on. There are some original SAT guys there, however...

Original SAT went T/U in late 1998.

On a happy note: SAT reunion 10/5,6,7 in LAS. Should be a blast!!

Regards,
Clutch

Errr, it's "Mandarin".

Start working out, too. The medical is quite thorough.

Two comments:

1.) Anyone who didn't think the long announced 2014 pullout of Afghanistan wasn't going to reduce cargo traffic is a moron. I'm sure there was hope for a huge "retrograde" of gear back to the states but previous experience shows a preference just to leave things there.
2.) I find it awesomely curious that SAI "had to make "above-market" lease payments on its fleet of Boeing cargo jets. The company said it will use its bankruptcy case to renegotiate its lease agreements" since the 777's are leased from another Oak Hill operation....and that the $25mil load was also from Oak Hill. Smells like a dead fish there.

Best of luck to everyone...I enjoyed the vast majority of the folks I flew with there...the company, not so much.

The company was referencing the newly leased 4 747-400's, which they are, in fact, paying too much for.

Strange, we were in Section 6 for over a year with not much to show for it- at least not much was communicated to the pilot group...

Now all of a sudden we're going to see a TA this week to vote on, that will vastly affect our lives???

Hmmmm I just wonder what vast pay and QOL improvements SA will offer in exchange for fewer furloughs? BOHICA

I am humourously excited to see what SA management has up their sleeve to make our contract even WORSE...

If what SAI Management has to offer is worse than what we have now, don't accept it!! This TA is for years to come, boys!!
The company can go before the BK judge and ask to throw out the old contract; this will be a 50/50 chance and delay any changes of the current CBA to something less desireable.

Think of it like an ugly girlfriend giving you the ultimatum to marry her. this is til death due us part, and she ain't getting prettier; or you get a better job.

If anyrthing, not accepting the first TA will buy guys more time until they get a better job elsewhere. I hear Delta and United are begining to hire.

Good luck to us all!

SB

I'm sorry far what's happened at SA. I went through this at a Delta owned regional and it is a stratigic move to make you take a pay cut! Think of the most succesfull ACMI's! Atlas pilots have a great contract and the company does well. Kalitta Pilots have a good contract and the company prospers! My point is you fly 747s and are away from home 20 days a month so don't give up a dime! Good Luck