Kitty Hawk has revealed plans to purchase Southern Air Transport (SAT) after merger negotiations unexpectedly broke off between financially ailing SAT and Fine Air.

Dallas, Texas-based Kitty Hawk, a charter passenger and cargo carrier which recently acquired American International Airways and other Kalitta companies, agreed to buy SAT for an undisclosed amount of cash and stock.

The letter of intent was signed after Fine Air and SAT mutually agreed to terminate their agreement, which was announced on 20 July. Fine Air says that "-both parties decided to explore other business opportunities" after failing to finalise a contract. The airline reportedly began losing interest after taking a more detailed look at SAT's finances.

Fine Air had said it would use SAT's Boeing 747 freighters to extend services in South America and expand high volume cargo routes. Chief executive Barry Fine says its long-haul growth plans remain in place despite the setback. Other, unnamed opportunities are being explored.

SAT says the new deal will have "a positive impact" for both companies. The privately held firm, based in Columbus, Ohio, operates five leased 747-200Fs and holds options for three more.

Kitty Hawk's deal does not include 14 SAT-owned Lockheed L-100 Commercial Hercules freighters that remain on the auction block. SAT offers aircraft under long-term wet-lease contracts. Tom Christopher, the company's chairman, says the acquisition will allow Kitty Hawk "-to increase its widebody air cargo services and capabilities". SAT will be operated as a separate subsidiary.

Kitty Hawk claims to be the world's seventh largest air freight carrier, operating 120 owned and leased aircraft, including 11 747s and 31 Boeing 727-200s, 19 McDonnell Douglas DC-8s, five DC-9-10s and eight Lockheed L-1011 TriStar freighters.

The publicly traded US company ended last year with $18 million of net income on revenues of $250 million, although the inclusion of the Kalitta results for the first half of this year has seen net profit weakening to $3.3million on revenues of $303 million.

Source: Flight International