CEO Says Champion Air May End Operations In 2008

Charter operator Champion Air may soon suffer a technical knock-out, a victim to the loss of key contracts and high operating costs.

The Minneapolis/St. Paul Star Tribune reports the airline, which operates a 16-plane fleet of Boeing 727 trijets, is nearing the end of a lucrative contract to fly 13 National Basketball Association teams. It also faces the loss of charter operations for Northwest Airlines subsidiary MLT Vacations... about 70 percent of the Champion's current flights.

In a recent letter to federal mediators, Champion CEO Lee Steele wrote the airline faces the loss of "all contract revenue" on its current obligations by the end of August 2008, and will need new funds to survive.

"The NBA contract ends in 2008 and will not be renewed due to Champion's inability to upgrade to newer aircraft," Steele wrote in the October 4 letter to the National Mediation Board, obtained by the Star Tribune.

Steele asked the board to delay pilot contract talks due to the airline's woes. Champion's 727s require three-pilot flight crews, including a flight engineer.

For the moment, the airline is actively "seeking an investor who can be persuaded to finance a new fleet and a modified business plan.

"The lower [post-bankruptcy] costs at Northwest, MLT's decision to shift its business away, the NBA's desire for newer aircraft, and the burden of maintaining and trying to market an aging and inefficient B727 fleet have created a perfect storm," Steele told mediators.

Champion posted a $488,000 loss for 2006, from operating revenue of $155 million. That followed a net income of $3.3 million for 2005.

Many employees at Champion have responded to ongoing strife, by simply leaving. Forty percent of the 142 pilots at the airline as of January 2007 have left; some have been replaced, bringing the company's current roster to 107. A number of executives have also jumped ship.

A representative with the Champion branch of the Air Line Pilots Association went before Northwest executives in October, asking for opportunities for Champion pilots to hire on with Northwest.

"If pilots were given an opportunity to transfer to Northwest Airlines if Champion does not survive, many pilots would stick with Champion throughout the next year," ALPA's Matt Marsh said.

Champion spokesman Jon Austin admitted the airline is facing its share of problems.

"We will need to find new business opportunities to replenish our client roster and to fuel growth opportunities," Austin said. "This is particularly important to us in the coming year as many tour operators -- including some of our longstanding clients -- are increasingly using scheduled carriers for the travel portion of their packages."

FMI: www.championair.com