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Mon, Mar 31, 2008

Another Airline Shut Down: Champion Air To Cease Operations Next Month

Charter Carrier To Stop Flying May 31

Two days... and two fewer US airlines. Hot on the heels of Aloha Airlines' Sunday announcement it will stop flying at the close of business Monday, Champion Air announced it will cease flight operations effective May 31.

"This is a sad day for the entire Champion family," said Champion President and CEO Lee Steele. "The men and women of this airline have poured themselves into providing safe, reliable and pleasing service to millions of customers over our 11 years in business. Unfortunately, however, our business model is no longer viable in a world of $110 oil, a struggling economy and rapidly changing demand for our services. Those factors also have impeded our efforts to attract new capital and new investors. Accordingly, the management team and our board of directors have decided that the best course of action is to cease flying and to wind up our operations in a responsible, deliberate manner."

Champion's demise has been predicted for several months. As ANN reported in December 2007, Steele hinted the end was likely nigh, as the carrier faced the impending loss of "all contract revenue" on its prior arrangements by August 2008. The airline -- which operates a fleet of Boeing 727s -- operated charter flights for Northwest Airlines subsidiary MLT Vacations, and 13 National Basketball Association teams.

In his announcement Monday, Steele noted the run-up in fuel prices strongly impacted Champion’'s fleet of aging, thirsty trijets... and that both the overall economic slowdown and the tight credit markets had a strong, negative impact on the airline’s business prospects and its efforts to attract investors.

Compounding the challenges facing the airline was a growing trend in the marketplace away from charter carriers for certain types of flying... the very market Champion clung to.

"Champion really has experienced a 'perfect storm' that has simultaneously affected our cost structure, our ability to generate revenue and our ability to restructure ourselves," Steele said. "Any one of those factors would be difficult; collectively they are insurmountable…even with the tremendous employees we have and the best efforts of everyone involved.

"The people of this airline can take a very justifiable pride in what they have created," Steele continued. "This situation is in no way a reflection of their talents, their commitment or their passion for our customers."

Champion tells ANN it will fulfill all outstanding service commitments and will remain fully in compliance with all regulatory, operational and labor contract requirements. The company has adequate funds to continue operations and to settle all outstanding financial obligations. The airline’s current 550 employees will continue to receive their pay and benefits through May 31.

Notification of the impending shutdown as mandated by the Worker Adjustment and Retraining Notification (WARN) Act and any similar state and local regulations is underway.



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