Defense cuts force Southern Air to file for bankruptcy
(Reuters) - U.S. cargo airline Southern Air Inc STAIR.UL filed for bankruptcy protection early on Friday, citing cutbacks in defense budget and U.S. troop reduction in Afghanistan.
The filing comes as Washington's self-imposed year-end deadline approaches to agree on a plan to shrink the federal budget or trigger $600 billion in spending cuts and higher taxes.
The Pentagon early this year outlined a 2013 budget plan to reduce spending by $487 billion over the next decade.
Governmental services accounted for about 44 percent of the company's revenue for the year ended July 31.
In January, U.S. Defense Secretary Leon Panetta said the United States intends to end combat operations in Afghanistan before the end of 2013.
Southern Air posted a revenue of about $428.2 million and a net loss of $159.8 million for the year ended July 31. The company had assets of about $206.9 million and liabilities of about $486.5 million as of that date.
The Connecticut-based company, which operates a fleet of 11 Boeing Co (BA.N) aircraft, has about 611 full-time employees, according to its Chapter 11 petition.
Global Aviation Holdings Inc, the largest commercial provider of chartered flights for the U.S. military, in February filed for Chapter 11 protection due to U.S. pullout from Iraq and defense spending cuts.
Southern Air, which was started in 1947, is majority owned by private equity firm Oak Hill Capital Partners II L.P.
Oak Hill has also agreed to provide the company with $25 million debtor-in-possession financing.
Parent Southern Air Holdings and several other entities were also part of Friday's Chapter 11 bankruptcy protection filling.
The case is In Re: Southern Air Inc, Case No. 12-12690, U.S. Bankruptcy Court, District of Delaware.
(Reporting by Tanya Agrawal and Sakthi Prasad in Bangalore; Editing by Greg Mahlich and Sriraj Kalluvila)
- Tweet this
- Share this
- Digg this
- China should set lower 2015 GDP growth target of 6.5-7 pct - IMF
- One dead, one wounded in shooting in Chicago financial district
- Netanyahu vows to complete Gaza tunnels destruction
- U.S. says hopeful of WTO deal with India only hours before deadline
- UPDATE 3-Argentine assets drop after default, "credit event" in balance