Ramon Lopez/WASHINGTON DC
Kitty Hawk has terminated negotiations to buy financially troubled Southern Air Transport (SAT), after the two companies failed to reach a final agreement.
Neither airline would say what led to the decision to break off talks, which started soon after Miami, Florida-based Fine Air Services dropped its plan to acquire SAT.
"Although we're disappointed that we couldn't reach a definitive agreement, it has no impact on our long-term growth plans," said Tom Christopher, Kitty Hawk's chairman and chief executive. The Dallas-based company says that there are no penalties or fees associated with the cancelled deal.
Privately held SAT, which is based in Columbus, Ohio, operates a fleet of five leased Boeing 747-200 freighters and holds options for three additional 747-200Fs. SAT's 14 Lockheed L-100 Commercial Hercules freighters are being disposed of.
Kitty Hawk, a growing charter passenger and cargo air carrier which recently acquired American International Airways and other Kalitta Companies, announced on 24 August that it had signed a non-binding letter of intent to acquire SAT for an undisclosed amount of cash and stock.
Christopher says the deal was designed to increase his firm's widebody air cargo services and capabilities. SAT would have been operated as a separate subsidiary. The intention had been to close the deal when a definitive agreement was executed and all regulatory approvals were in hand.
Kitty Hawk made its move after Fine Air and SAT had "mutually agreed" to terminate their deal on 20 July. Fine Air says that "...both parties decided to explore other business opportunities" after failing to finalise a contract.
No explanation for Fine Air's withdrawal has been given, but industry sources say financial issues and the fact that the SAT's 747s are powered by three different engine types persuaded the company against pursuing the deal.
It is unclear whether SAT will be able to find another suitor. Colorado-based Atlas Air, a leading wet-lessor of 747 freighters, had shown some interest in SAT before the Fine Air and Kitty Hawk talks, and the company confirms that there were "some conversations" which did not lead to a formal offer. It is not known whether Atlas has renewed its interest.
Source: Flight International
