Cyclic Hotline
23rd Jan 2002, 23:13
Cargo firm can't deliver
CHAPTER 11: Mail dispute forces Alaska Central Express to file.
By Paula Dobbyn . .Anchorage Daily News
(Published: January 23, 2002) . .Alaska Central Express, an Anchorage-based air-cargo company, has filed for Chapter 11 bankruptcy protection following a dispute with the U.S. Postal Service over rural mail delivery.
If the airline fails to win its case against the Postal Service and loses the ability to deliver mail, it will have "no choice but to substantially reduce its operations and lay off many of its approximately 100 employees," the company said Tuesday.
The carrier has ties to the Bergt family of Alaska who ran MarkAir, the state's largest passenger airline until it collapsed under a mountain of debt in the mid-1990s. Anne Butler, estranged wife of former MarkAir mogul Neil Bergt, owns 49 percent of Alaska Central Express. Mike Bergt, Neil's son, is general manager. Neither could be reached for comment Tuesday.
Alaska Central filed papers in federal Bankruptcy Court in Anchorage on Saturday, seeking protection from creditors and a chance to reorganize. The company has until Feb. 4 to submit financial statements and until May 20 to turn in its reorganization plan, according to the filing.
The company hopes the Bankruptcy Court filing will allow it to continue mail delivery.
Alaska Central is profitable but was forced to seek bankruptcy protection after the Postal Service barred it from delivering postal cargo and packages between Anchorage and hubs such as Fairbanks and Bethel as of Jan. 25, said Bill Patch, vice president of Western States Investment Group, a California venture capital firm that owns 51 percent of the airline.
The dispute hinges on the Postal Service's decision that Alaska Central's aircraft are too small to carry what's called "mainline bypass mail." Typically that means bulky packages and crates of food, for example, that bypass the post office and go directly from the supplier's warehouse to the airline that delivers, with postal inspectors examining the freight before the planes leave the ground.
Planes delivering mail between Anchorage and Alaska's larger cities must be able to carry loads in excess of 7,500 pounds and have done so for at least a year. Alaska Central acknowledges that while six of its seven planes don't meet that standard because they can only carry up to 6,000 pounds, the company has grandfather rights because it's been hauling freight for the Postal Service since 1988.
The company blames its predicament on an unnamed competitor who complained to the Postal Service. The competitors include Northern Air Cargo, Alaska Airlines, Lynden Air Cargo and Air Cargo Express. An executive with Northern Air declined to have his name published. Calls to Alaska Airlines and Lynden Air were not returned. Air Cargo Express officials said although they did not tip off the Postal Service, they agree with whoever complained about Alaska Central.
"From our standpoint, they don't meet the requirements," said Susan Hoshaw, station manager. "It's been going on for a long time. I believe the post office finally got around to dealing with it face on."
The Postal Service was tight-lipped Tuesday.
"Since the matter is in litigation, the Postal Service will not comment," said Al DeSarro, a regional spokesman in Denver.
This isn't Alaska Central's first run-in with the Postal Service. Last June, the U.S. Justice Department joined a whistle-blower lawsuit of a former employee who accused the airline of bilking the Postal Service out of $365,000. Albert Wilt, a former comptroller and general manager of Alaska Central, complained the airline knowingly accepted overpayments from the Postal Service over a three-year period.
Wilt is finishing a 21-month prison sentence in a federal prison in Oregon for wire fraud, forgery and tax code violations. He plead guilty to embezzling $368,800 from Alaska Central, money he said was owned to him from MarkAir's demise.
Settlement talks are continuing in the government case against Alaska Central, said Charlie Cole, a Fairbanks attorney who has represented Neil Bergt in other cases. The Postal Service "mistakenly overpaid" Alaska Central and the money has since been returned to the government, Cole said.
Robin Koutchak, Wilt's criminal defense attorney, doesn't buy that it was a post office mistake and puts the blame squarely on Alaska Central.
"They started stealing," she said.
CHAPTER 11: Mail dispute forces Alaska Central Express to file.
By Paula Dobbyn . .Anchorage Daily News
(Published: January 23, 2002) . .Alaska Central Express, an Anchorage-based air-cargo company, has filed for Chapter 11 bankruptcy protection following a dispute with the U.S. Postal Service over rural mail delivery.
If the airline fails to win its case against the Postal Service and loses the ability to deliver mail, it will have "no choice but to substantially reduce its operations and lay off many of its approximately 100 employees," the company said Tuesday.
The carrier has ties to the Bergt family of Alaska who ran MarkAir, the state's largest passenger airline until it collapsed under a mountain of debt in the mid-1990s. Anne Butler, estranged wife of former MarkAir mogul Neil Bergt, owns 49 percent of Alaska Central Express. Mike Bergt, Neil's son, is general manager. Neither could be reached for comment Tuesday.
Alaska Central filed papers in federal Bankruptcy Court in Anchorage on Saturday, seeking protection from creditors and a chance to reorganize. The company has until Feb. 4 to submit financial statements and until May 20 to turn in its reorganization plan, according to the filing.
The company hopes the Bankruptcy Court filing will allow it to continue mail delivery.
Alaska Central is profitable but was forced to seek bankruptcy protection after the Postal Service barred it from delivering postal cargo and packages between Anchorage and hubs such as Fairbanks and Bethel as of Jan. 25, said Bill Patch, vice president of Western States Investment Group, a California venture capital firm that owns 51 percent of the airline.
The dispute hinges on the Postal Service's decision that Alaska Central's aircraft are too small to carry what's called "mainline bypass mail." Typically that means bulky packages and crates of food, for example, that bypass the post office and go directly from the supplier's warehouse to the airline that delivers, with postal inspectors examining the freight before the planes leave the ground.
Planes delivering mail between Anchorage and Alaska's larger cities must be able to carry loads in excess of 7,500 pounds and have done so for at least a year. Alaska Central acknowledges that while six of its seven planes don't meet that standard because they can only carry up to 6,000 pounds, the company has grandfather rights because it's been hauling freight for the Postal Service since 1988.
The company blames its predicament on an unnamed competitor who complained to the Postal Service. The competitors include Northern Air Cargo, Alaska Airlines, Lynden Air Cargo and Air Cargo Express. An executive with Northern Air declined to have his name published. Calls to Alaska Airlines and Lynden Air were not returned. Air Cargo Express officials said although they did not tip off the Postal Service, they agree with whoever complained about Alaska Central.
"From our standpoint, they don't meet the requirements," said Susan Hoshaw, station manager. "It's been going on for a long time. I believe the post office finally got around to dealing with it face on."
The Postal Service was tight-lipped Tuesday.
"Since the matter is in litigation, the Postal Service will not comment," said Al DeSarro, a regional spokesman in Denver.
This isn't Alaska Central's first run-in with the Postal Service. Last June, the U.S. Justice Department joined a whistle-blower lawsuit of a former employee who accused the airline of bilking the Postal Service out of $365,000. Albert Wilt, a former comptroller and general manager of Alaska Central, complained the airline knowingly accepted overpayments from the Postal Service over a three-year period.
Wilt is finishing a 21-month prison sentence in a federal prison in Oregon for wire fraud, forgery and tax code violations. He plead guilty to embezzling $368,800 from Alaska Central, money he said was owned to him from MarkAir's demise.
Settlement talks are continuing in the government case against Alaska Central, said Charlie Cole, a Fairbanks attorney who has represented Neil Bergt in other cases. The Postal Service "mistakenly overpaid" Alaska Central and the money has since been returned to the government, Cole said.
Robin Koutchak, Wilt's criminal defense attorney, doesn't buy that it was a post office mistake and puts the blame squarely on Alaska Central.
"They started stealing," she said.