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Military aviation charters hit economic turbulence

For decades, the U.S. military has been chartering commercial aircraft to carry personnel and cargo to conflicts and on humanitarian missions around the world.

But in the past several months, several major players in the military aviation charter industry have either scaled back their operations or closed down completely, citing a tepid global economy and ongoing Pentagon budget cuts. Last week, World Airways announced it has operated its last flight and was laying off 325 employees, including 109 pilots and 146 flight attendants.

The company, a subsidiary of Global Aviation Holdings, considered the U.S. military as its primary customer. World Airways aircraft began transporting soldiers and materiel starting with the Korean War and continued to operate through to Vietnam, the Gulf wars and the ongoing conflict in Afghanistan.

But Global Aviation filed for Chapter 11 bankruptcy protection last November, and World has been on the market for the past several months, unsuccessfully seeking financing for its restructuring.

"The battle to save World has been difficult," Eric Bergesen, the company's COO, said in a statement announcing the carrier's shutdown. "A lot of people have worked hard to try to save our airline. Despite this regrettable outcome, I sincerely thank each of our employees for their dedication and continued support as we attempted to build a future for the company."

Industry analysts say World Airways faced intense competition for shipping cargo from UPS (UPS), Atlas Air Worldwide Holdings (AAWW) and Fedex (FDX). And according to The Deal magazine, "Global Aviation in its bankruptcy filing said that a decision by the U.S. Air Force to cancel a 2014 contract with World in response to budget pressures cost the airline $54 million in revenue."

Global Aviation's other subsidiary, North American Airlines, will reportedly continue flying for the time being in hope of emerging from bankruptcy. North American has a fleet of five Boeing 767-300ER jets, which the company says on its website provide international charters for the U.S. military and also for "Tour Operators, Incentive Groups, Government Agencies, Sports Teams and other airlines."

Another major aviation charter company, Oregon-based Evergreen International Airlines, filed for Chapter 7 bankruptcy on Dec. 31. Several weeks earlier, while addressing reports about the company's financial woes, CEO Delford Smith acknowledged that "Evergreen's business has been adversely impacted over the past several years by decreased demand in military spending and weakness in global economic markets."

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