AEXJet files for bankruptcy | AspenTimes.com

AEXJet files for bankruptcy

Rick CarrollAspen, CO Colorado

ASPEN Financially strapped Aspen Executive Air has filed for Chapter 11 bankruptcy protection, the latest setback for the upscale charter airline service.The voluntary bankruptcy petition, filed Friday in the U.S. Bankruptcy Court in Delaware, lists up to $100 million in liabilities. Even so, the privately held carrier, which is based at Aspen-Pitkin County Airport, plans to keep flying, said company president and CEO John Gallaher.The goal of the bankruptcy process is for us to keep continued service, Gallaher said Monday.Gallaher added the reorganization will not affect the jobs of the 55 people the company employs. No jobs will be lost, he said. In a related development, Aspen Executive Air, better known as AEXJet, released a two-page statement Monday revealing plans to enter into a business combination with another private air-charter operator. Gallaher expects to announce the identity of the charter operator within the next two weeks; the joint venture will help keep the airline in business during bankruptcy. AEXJets bankruptcy sits against a backdrop of financial problems for the company, which are reflected in public records. Earlier this year, a notice of a federal tax lien was filed in the Pitkin County Clerk & Recorders Office, claiming that AEXJet is delinquent in its tax payments for seven tax periods, the first ending Dec. 31, 2004. All told, AEXJet owes $1,013,038, according to the IRS notice, which seeks whats known as an excise tax from AEXJet. Airlines pay two types of excise taxes a fuel excise tax and a passenger tax. The IRS claims that AEXJet owes for the passenger tax. Gallaher said that between $650,000 and $700,000 has been paid toward the balance. And in July 2006, Minnesota-based JLT Aircraft Holding Co. LLC and Walker Aircraft LLC filed papers in Pitkin County District Court trying to collect judgments totaling $31 million. The two firms, which had leased aircraft to AEXJet, filed the documents after a federal judge ruled in April 2006 that AEXJet owed them money for the leases on two Gulfstream G200s and a Dassault Falcon 900B. AEXJet lease agreements called for it to pay $128,000 a month for each Gulfstream to JLT Aircraft, and $142,000 monthly to Walker Aircraft for the Falcon, according to court papers.Gallaher said those aircraft are no longer part of AEXJets fleet, noting that Walker sold its Falcon in July, and JLT Aircraft now manages the two Gulfstream G200s. Minnesota attorney George Eck, who represents Walker and JLT, could not be reached late Monday. The loss of those aircraft reduces AEXJets fleet to five airplanes a Bombardier Lear 35A, a Raytheon Beechjet 400A, a Dassault Falcon 50, a Cessna Citation X and a Gulfstream G200.The $19.8 million judgment to JLT as well as the $11.2 million judgment to Walker are the biggest debts AEXJet has listed on its bankruptcy petition. The Aspen Art Museum and Aspen Magazine also are listed among its top 25 creditors, and are owed $25,000 and $14,119, respectively.Gallaher said the two judgments factored into the decision to file for bankruptcy protection. Im not sure what the final straw was, but we were working toward negotiation something [with the judgments] and it didnt come to fruition, he said. He declined to elaborate. The charter flies out of Aspen nonstop to New York, Chicago, San Francisco, Atlanta, South Florida, Houston and Austin, Texas. Since it launched in March 2003, AEXJet has marketed its services through a three-tier program with memberships ranging from $125,000 to $500,000. The programs function like a debit account, with fliers accounts charged each time they fly, based on an hourly rate and other fees. AEXJet has marketed its service to wealthy travelers and has billed its offerings as a luxury alternative to the hassle that comes with flying commercial.Rick Carrolls e-mail address is rcarroll@aspentimes.com