US cargo airline Southern Air applied for Chapter 11 bankruptcy protection on Friday, as the company experienced cash shortages because of its deteriorating financial condition.
Southern Air cited cutbacks in defence budget and US troop reduction in Afghanistan as a reason.
The filing comes as Washington's self-imposed year-end deadline approaches to agree a plan to shrink the federal budget or trigger USD$600 billion in spending cuts and higher taxes.
The Pentagon early this year outlined a 2013 budget plan to reduce spending by USD$487 billion over the next decade.
Governmental services accounted for about 44 percent of Southern Air's revenue for the year ended July 31.
In January, US Defence Secretary Leon Panetta said the United States intends to end combat operations in Afghanistan before the end of 2013.
Southern Air posted revenue of about USD$428.2 million and a net loss of USD$159.8 million for the year ended July 31. The company had assets of about USD$206.9 million and liabilities of about USD$486.5 million as of that date.
The Connecticut-based company, which operates a fleet of 11 aircraft, has about 611 full-time employees, according to its Chapter 11 petition.
Global Aviation Holdings, the largest commercial provider of chartered flights for the US military, in February filed for Chapter 11 protection due to US pullout from Iraq and defence spending cuts.
Southern Air, which was started in 1947, is majority owned by private equity firm Oak Hill Capital Partners.
Oak Hill has also agreed to provide the company with USD$25 million debtor-in-possession financing.
Parent Southern Air Holdings and several other entities were also part of Friday's Chapter 11 bankruptcy protection filling.
Gravity always wins!