Click here to follow us on Facebook

Southern Air to retire Classics, cut employees

By Hpanchal on September 7, 2012

In the next few months, Southern Air will accelerate the retirement of its 747-200s and lay off an unspecified number of employees, according to an email sent to Southern Air employees by CEO Dan McHugh and obtained by Air Cargo World. McHugh also wrote that the company will focus on ways to reduce corporate debt and improve a capital structure Southern Air inherited from the private equity firm Oak Hill Capital Partners when it acquired a majority share in the ACMI firm in 2007. Oak Hill combined an existing air cargo holding, Cargo 360, into the Southern Air fold.

"Today, a significant level of our resources and infrastructure are devoted to running and maintaining the -200s. We now must realign our organization to serve the new business model, including changes to our crew planning, and we will initiate select outsourcing of activities to better align our costs with the operating requirements," McHugh wrote in the email, which is dated August 21.

"As a result," he continued, "we will begin reducing headcount in both line operations and headquarters staff. There will be direct staff reductions, as well as outsourcing of some activities, and we expect the majority of the changes to be in place by the end of the year."

Southern Air officials have also stopped the process of a possible relocation of the company's headquarters from Norwalk, Conn. Neither McHugh nor any other Southern Air employee who could comment on the memo was in the office on Friday morning.

In the letter, McHugh wrote that he had expected to keep the -200s, known as Classics, in the Southern Air fleet until April 2013. Declining demand, higher operating costs and increasing regulations, he wrote, were deciding factors in the accelerated time table. Southern Air has been weighing the retirement for at least the past 18 months. As McHugh put it, "our traditional ACMI customer base is not actively planning to add 747-200 or 747-400 capacity in the near term."

McHugh outlined that these fleet adjustments highlight a new strategy for Southern Air moving forward. The company will continue its relationship with DHL Express and other companies, while searching out new partners. He wrote that the fleet retirement is "not merely a short-term, cost-cutting move" and that it instead signals the start of a business transformation.

"In order to make Southern Air stronger and operate more efficiently," he wrote, "we need to transition from a high-maintenance, depreciated classic fleet, to a modern, efficient fleet operating in more reliable, low-cost, low-risk environments."

Comments

The Boeing 747-200F are outdated to make money
in selling just Air Cargo. You have a Main Deck
Cargo Door so all you have to do is install Pasgr.
Seats in the Front of the Aircraft.. Crazy No. I am
TheAir Cargo Junky. Make this Aircraft in to
a Combi 747-200M. Sell the Airplanes to the
smaller Countries that will have two services
and one Aircraft. I did it in working for Garuda
Indonesia. by Leasing one of the original 747-200M
Combis.....ONe 100% revenue Load factor on all
flights between Indoneisia "JKT" and LAX When
in 1994-95... Check it out. Your only chance
lest to find a customer for your Classic B7747F's.
Yes, I loaded then ata FTL-SLI when back when.

Ernesto, the ongoing fact that NO one does this kind of stuff anymore should speak volumes to you about its current impracticality --- and it's not going to change anytime soon either, if ever. You'll have to move on, sir.

Submitted by Ron on

The Classic 747 is an outdated high maintenance aircraft. It is time for them to join the waiting list for beer can resupply. No operator can afford to pay the high cost of fuel, maintenance and the third crew member. Everything has a life and the classics have come to the end of theirs.

Add new comment

Filtered HTML

  • Web page addresses and e-mail addresses turn into links automatically.
  • Allowed HTML tags: <a> <em> <strong> <cite> <blockquote> <code> <ul> <ol> <li> <dl> <dt> <dd>
  • Lines and paragraphs break automatically.

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.