Capital Cargo to shut down in Q1 2013

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Orlando-based Capital Cargo International Airlines will shut down its Orlando operation as it prepares to merge with Air Transport International, a sister airline also owned by Air Transport Services Group.

The merger is scheduled to take place by the first quarter of 2013, the airline says. It filed a notice that 79 people would be affected by layoffs between 31 December 2012 and March 2013. About half of the Capital staff will be moving to Little Rock-based Air Transport International, the carrier says.

Capital Cargo International, founded in 1995, is an Federal Aviation Administration Part 121 carrier specialising in aircraft, crew, maintenance and insurance freight services. ATSG will not retain the Orlando facility for its operations after the carrier shuts down.

ATSG made the move to merge Capital Cargo International Airlines into ATI after losing business from its second-biggest customer D.B. Schenker, which announcing a restructuring of its cargo operations in July 2011. ATSG said in its second quarter earnings release that it had achieved a 24% reduction in personnel expenses compared to levels seen a year earlier and said it plans to see annual reductions in maintenance expenditures of $10 to $15 million by remoivng aircraft operated for Schenker. The carrier's subsidiaries had operated eight Boeing 727s and eight Douglas DC-8 freighter aircraft until it decided to phase them out of the network through the end of 2012.

Capital Cargo and Air Transport International's pilots are both represented by the Air Line Pilots Association and are combining pilot groups and seniority lists as part of the transition.

Capital Cargo operates a fleet of Boeing 727-200 Boeing 757-200 converted freighters.