CEO Says Champion Air May End Operations In 2008
Charter operator
Champion Air may soon suffer a technical knock-out, a victim to the
loss of key contracts and high operating costs.
The Minneapolis/St. Paul Star Tribune reports the airline, which
operates a 16-plane fleet of Boeing 727 trijets, is nearing the end
of a lucrative contract to fly 13 National Basketball Association
teams. It also faces the loss of charter operations for Northwest
Airlines subsidiary MLT Vacations... about 70 percent of the
Champion's current flights.
In a recent letter to federal mediators, Champion CEO Lee Steele
wrote the airline faces the loss of "all contract revenue" on its
current obligations by the end of August 2008, and will need new
funds to survive.
"The NBA contract ends in 2008 and will not be renewed due to
Champion's inability to upgrade to newer aircraft," Steele wrote in
the October 4 letter to the National Mediation Board, obtained by
the Star Tribune.
Steele asked the board to delay pilot contract talks due to the
airline's woes. Champion's 727s require three-pilot flight crews,
including a flight engineer.
For the moment, the airline is actively "seeking an investor who
can be persuaded to finance a new fleet and a modified business
plan.
"The lower [post-bankruptcy] costs at Northwest, MLT's decision
to shift its business away, the NBA's desire for newer aircraft,
and the burden of maintaining and trying to market an aging and
inefficient B727 fleet have created a perfect storm," Steele told
mediators.
Champion posted a $488,000 loss for 2006, from operating revenue
of $155 million. That followed a net income of $3.3 million for
2005.
Many employees at Champion have responded to ongoing strife, by
simply leaving. Forty percent of the 142 pilots at the airline as
of January 2007 have left; some have been replaced, bringing the
company's current roster to 107. A number of executives have also
jumped ship.
A representative with
the Champion branch of the Air Line Pilots Association went before
Northwest executives in October, asking for opportunities for
Champion pilots to hire on with Northwest.
"If pilots were given an opportunity to transfer to Northwest
Airlines if Champion does not survive, many pilots would stick with
Champion throughout the next year," ALPA's Matt Marsh said.
Champion spokesman Jon Austin admitted the airline is facing its
share of problems.
"We will need to find new business opportunities to replenish
our client roster and to fuel growth opportunities," Austin said.
"This is particularly important to us in the coming year as many
tour operators -- including some of our longstanding clients -- are
increasingly using scheduled carriers for the travel portion of
their packages."