Arundel's Air Cargo to file for Chapter 11

Layoffs are expected for 60 of 80 workers

a truck service is halted

December 04, 2004|By Meredith Cohn | Meredith Cohn,SUN STAFF

Air Cargo Inc., an Annapolis freight logistics company partly owned by the Carlyle Group, said yesterday that it planned to immediately cease some operations and file for Chapter 11 bankruptcy reorganization early next week.

Anne Arundel County officials said that 60 of the company's 80 workers are expected to lose their jobs.

The privately held company was created in 1941 to move ground freight and provide management services. Today it is partly owned by 17 commercial airlines and has expanded its services to 70 clients, including domestic and international airlines and other companies.

The Carlyle Group, a private equity firm in Washington, purchased a stake in Air Cargo in 2003 for an undisclosed amount.

Air Cargo stopped yesterday a service that hires trucking companies to move goods to and from airports on behalf of the airlines, according to Doug Faber, the company's president and chief executive.

Air Cargo plans to continue other operations such as contract management, freight auditing and invoicing and payment services. It also will continue to publish its Air Freight Directory, an industry pricing guide.

"To facilitate these actions, and allow for an orderly progress of its business, the company stated that it will file a petition under Chapter 11 of the United States Bankruptcy Code early next week," Faber said in an e-mail.

Faber said he could not comment further on the financial status of the company, layoffs or other plans. The Carlyle Group declined to comment.

The trade publication Air Cargo World quoted industry sources as saying Carlyle told Air Cargo's board in recent weeks that it would not invest any more than the $13 million it already had put toward rebuilding efforts.

"It's a huge disappointment," David E. Wirsing, president of the Airforwarders Association and a former executive of Air Cargo, told Air Cargo World. "How the airlines fill the gap now is a real question. [Air Cargo] has provided efficiencies for the airlines and now some carriers are going to be looking at whether they need to create their own line haul operations."

Some airlines maintain a small ownership stake in the company. One of them, US Airways, said it uses Air Cargo to manage freight that moves from airport to airport by truck. The carrier said it has a contingency plan in place to insure there is no disruption in service.

William A. Badger Jr., Anne Arundel County's director of economic development, said he spoke with company officials this week and was troubled to hear of the financial difficulties.

He said economic development officials would offer employment aid to affected workers. He was unsure when the layoffs would take effect.

"Air Cargo has been a quiet company and corporate headquarters in Annapolis," he said. "We don't like to see this happen with these kinds of jobs, which we believe are high-paying jobs."

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