Aviation Industries, the US airline investment vehicle that is backing Sun Jet's re-emergence from bankruptcy, has increased its stake in Kiwi International and is to negotiate the purchase of the low cost carrier.
Kiwi re-emerged from Chapter 11 bankruptcy protection in July with backing from private investor Charles Edwards, who now holds around 85% of the airline. Edwards has been actively looking for other backers and will now hold talks with Aviation Industries, which has already provided debt investment in Kiwi.
The airline was forced to declare bankruptcy in 1996 after a partial grounding in the wake of the ValuJet crash. It re-emerged with around half of its original fleet of 15 leased Boeing 727s and with seven destinations, including its base in Newark, New Jersey, Chicago and Atlanta. The carrier now employs 650 staff and has sales running at an annual rate of more than $80 million. Aviation Industries believes that Kiwi has a "solid route structure" and a familiar brand, adding that "-the basis for a profitable company is there.
"With additional capital, Kiwi expects to expand its marketing activities and begin the acquisition of smaller aircraft, which will allow it to serve more markets," says the investment company.
Last year, Kiwi promised to look for a new aircraft type and says that the plan now is to take on McDonnell Douglas DC-9s or Boeing 737s, although the replacement would be phased in over "several years". In the meantime, Kiwi is aiming to buy between two and five of the leased 727s to give it an asset base.
Aviation Industries is also involved in the resurrection of Sun Jet International Airlines, the charter and scheduled airline that suspended operations in June after being forced to file for Chapter 11. The investment company has agreed to acquire the airline and has already provided initial financing as well as agreeing to arrange another $5 million for working capital and fleet expansion. The re-organisation plan is due to be presented to the bankruptcy courts for approval by 20 March, with the aim of putting the airline back into service by the end of May.
Sun Jet president John Mansour says that the new airline will abandon the scheduled business, which was largely responsible for dragging the company into bankruptcy, in order to concentrate on more stable charter operations.
"I learned the lesson, and so has Pan Am," said Mansour in the wake of the latest low-cost US airline bankruptcy. The plan is to restart with DC-9s and Boeing MD-80s, growing to a fleet of four aircraft and 150 employees by the end of the year.
Source: Flight International
