Commander Files Chapter 11

Although rumored for some time (and denied vigorously by senior company officials right up until a few days ago), ANN has been able to confirm the bankruptcy filing of Commander Aircraft, in Delaware, late Friday afternoon. A company staffer confirmed that the filing had taken place, in Delaware, though Commander honcho Wirt Walker III (the Aviation General, Inc., Chairman/CEO) was traveling and not available for additional comment. Commander filed a voluntary bankruptcy petition under Chapter 11 of the US Bankruptcy Code in Federal Court. This will allow the company to operate under court protection while it reorganizes and restructures its finances and business.

Commander Aircraft Company, incorporated in 1988, acquired the Rockwell 112/114 single engine aircraft line, and designed and "engineered a series of aerodynamic, systems, avionics, and cabin improvements, resulting in the Commander 114B and turbocharged Commander 114TC." The 114B was TC'd by the FAA in 1992, and the 114TC received its Type Certificate in 1995. During 2000, the company introduced the 115/115TC series, an incremental upgrade of the original 112/114 line.

Insiders report that slow sales, high airframe prices, overall production volume (and associated poor economies of scale) and a number of management issues have plagued the corporate health of this otherwise highly-regarded aircraft (one of just a few, with a near-flawless AD record for more than a decade) for some time.

Commander has a somewhat more positive take on the matter... "The Company has a relatively low cost structure and a unique business model which have helped the Company remain viable during the depressed economic and industry conditions of the past two years, which have worsened recently. The Company has been working amiably with its creditors and vendors representing approximately $3.7 million in total net indebtedness. After seeming to rebound in the first half of 2002, orders for new and pre-owned aircraft softened significantly during the third quarter and have virtually hit the wall recently. Unfortunately, the Chapter 11 filing became necessary primarily as a result of several expected orders for new and pre-owned aircraft failing to be consummated, producing an immediate cash flow shortage of approximately $1 million."

The company claims it will "...continue its operations during the reorganization and is committed to supporting the fleet of existing Commander aircraft with service, parts, and refurbishment services, as well as limited production of new aircraft built to order. The Company is seeking additional DIP (Debtor In Possession) financing as well as qualified investors and/or merger opportunities with parties wishing to be part of a new corporate ownership structure."

CEO Walker notes that, "We look forward to discussions with financially qualified principals who are interested in refinancing, merging, or acquiring the Company."

A company statement explains that, "...depending upon contributions from the Company's non-manufacturing activities, the company can achieve break-even financial results with the manufacture and sale of ten to twelve new Commander aircraft per annum and can achieve significant profitability above these levels. For year 2002 ending December 31, the Company expects the delivery of only seven new aircraft with softness during the second half of the year in the company's other operations. The company believes the softness in its business is a result of an economic recession that began in the second half of year 2000, the significant decline in asset values in the U.S. security markets, the terrorist attack on September 11, 2001, continued anxiety over possible terrorist activities, weakness in the economy, and the drumbeat of possible war with Iraq, as well as weaknesses in international economies. Additionally, the Company's marketing, sales, and advertising expenditures have been sharply curtailed over the past two years due to budget constraints."

Commander Aircraft Company (along with Strategic Jet Services, Incorporated) is a wholly owned subsidiary of Aviation General, Incorporated. AGI is a publicly traded holding company. Commander Aircraft Company manufactures, markets and provides support services for its line of single engine, high performance Commander aircraft, and consulting, brokerage and refurbishment services for all types of piston-powered aircraft through its Aviation Services Division. Strategic Jet Services, Inc. provides consulting, brokerage, sales and refurbishment services for jet aircraft.

FMI: www.commanderair.com