Charter airline trims flights as merger stalls |

Charter airline trims flights as merger stalls

ASPEN ” Charter airline Aspen Executive Air’s merger talks with another carrier have stalled, and the bankrupt airline is trimming its service because of cash-flow problems.

That’s the gist of a 17-page affidavit by Aspen Executive Air CEO John Gallaher, which was made public in the U.S. Bankruptcy Court of Delaware on Tuesday.

Gallaher’s affidavit spells out the fiscal problems that thrust the airline, which is better known as AEXJet, into bankruptcy on Sept. 14, and the complex negotiations that ensued with Arkansas-based Pinnacle Air. In the affidavit, Gallaher concedes that AEXJet is operating on a limited basis, and in an interview Tuesday, he said the airline has suspended flights for its clients who have “balances.”

Those customers with balances are ones who bought memberships ranging from $125,000 to $500,000. The program functions like a debit account, with flyers’ accounts charged each time they fly, based on an hourly rate and other fees. AEXJet, which is headquartered in Basalt, flies nonstop out of Aspen to New York, Chicago, San Francisco, Atlanta, South Florida, Houston and Austin, Texas.

The members account for about 60 percent of AEXJet’s flights, Gallaher said, adding that on-demand flights are still available, and individual owners of the airline’s aircraft can fly as well. He declined to discuss what clients have said about the suspended flights, and a motion was filed in bankruptcy court Tuesday seeking to seal their names.

In the meantime, AEXJet is trying work through its Chapter 11 reorganization by hatching some sort of deal with Pinnacle. Merger discussions have slowly progressed, and Gallaher said in the affidavit that Pinnacle could end up acquiring most of AEXJet’s assets.

“We’ve very optimistic that this deal can happen and we can move forward in the future,” Gallaher said in the interview.

Another key player in the discussions between AEXJet and Pinnacle is John Calamos, according to the affidavit. Part of the transaction calls for Calamos becoming the controlling shareholder in Pinnacle. Already, Calamos has a 50 percent ownership in Calim Private Equity LLC and directly owns 6.25 percent of Calim Venture Partners II, both of which are equity security holders in AEXJet, which launched in 2002.

According to Gallaher’s affidavit, Calamos and Pinnacle continue to analyze whether the deal makes financial sense for them.

“The negotiations … are complex and have taken time,” Gallaher states in the affidavit.

The parties all met on Sept. 26 in Chicago, Gallaher states in the affidavit, and “intense negotiations have continued among the parties since the meeting.”

In the meantime, AEXJet has been meeting its payroll with the help of backer Calim Ventures Partners II, and Calamos also loaned the carrier funds to pay its employees.

Gallaher said in the interview that whether AEXJet merges or sells its assets, it’s unlikely jobs will be lost.

“The employees on both sides will be needed to run the combined operation,” he said.

Gallaher’s affidavit states that AEXJet generated a gross revenue of $17.9 million in 2006 and $15.3 million so far this year, but the airline “has been suffering losses on its operations.”

AEXJet is $66.9 million in debt ” including $30 million to two aircraft leasing companies, $1.1 million to the IRS, and $23.7 million to the Calim concerns, among other debts, according to the affidavit.

The debt ” the amount owed to the leasing firms is in dispute “combined with a cash shortage put AEXJet in bankruptcy and prompted AEXJet to start negotiations with Pinnacle Air, Gallaher’s affidavit suggests.

Support Local Journalism

Support Local Journalism

Readers around Aspen and Snowmass Village make the Aspen Times’ work possible. Your financial contribution supports our efforts to deliver quality, locally relevant journalism.

Now more than ever, your support is critical to help us keep our community informed about the evolving coronavirus pandemic and the impact it is having locally. Every contribution, however large or small, will make a difference.

Each donation will be used exclusively for the development and creation of increased news coverage.


Start a dialogue, stay on topic and be civil.
If you don't follow the rules, your comment may be deleted.

User Legend: iconModerator iconTrusted User