Southern Air Inc, an air cargo carrier in the United States, filed for bankruptcy protection on Friday, stating U.S. defense budget cuts and reduction of troops in Afghanistan.
The bankruptcy filing has come about as the self-imposed deadlines of Washington to agree on a program to reduce the federal spending or implement $600 billion in cutbacks and increase taxes.
Early this year, the Pentagon laid out its 2013 budget plan to reduce $487 billion of expenses within the next 10 years.
Government services consisted of approximately 44 percent of Southern Air’s income for the past year.
The U.S. Defense Secretary said early this year that it plans to pull out the combat operations in Afghanistan next year.
According to the company, it had $428.2 million in revenues and $159.8 million net loss as of July 31. Southern Air had around $206.9 million in assets and approximately $486.5 million in liabilities.
Based on its bankruptcy petition, the company operates 11 Boeing Co aircraft and employs 611 people.
The biggest chartered flights provider of the U.S. military has filed for Chapter 11 bankruptcy protection in February. Global Aviation Holdings Inc cited U.S. defense cutbacks and pullout from Iraq as causes of its financial woes.
Southern Air, which is based in Connecticut, is mostly owned by private equity finance firm Oak Hill Capital Partners II L.P. The company was created in 1947.
Oak Hill will provide Southern Air with $25 million debtor-in-possession funding.
The parent company of Southern Air Holdings and various other affiliates were also included in the Chapter 11 filing on Friday.
In a statement released by Southern Air, it said it will remain open for business and continually provide air cargo services to its customers. It hopes to complete the reorganization as soon as possible.
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