SNELLVILLE, Ga., Sept. 4, 2013 /PRNewswire/ -- Alas Aviation Corp., (OTCQB: ALAS), a niche operator of air cargo and related ground service operators through its operating subsidiary Corporacion Ygnus Air, S.A. ("Cygnus"), today announced that Cygnus, the subject of a share exchange agreement between Air Transport Group ("ATG"), Arnold Leonora and Alas Aviation ("ALAS"), would have generated over $23 million in adjusted EBITDA for calendar years 2010 through 2012 had it not incurred over $18 million in certain non-recurring costs, and forecasts over $6 million in EBITDA from ongoing contracts for calendar year 2013. Cygnus incurred over $18 million in costs for idled and inoperative aircraft under former ownership between 2010 to 2013 which Alas believes were fully preventable and distort the true profitability of its core service contracts.
Acquired by Arnold Leonora and his ATG in early 2013, Cygnus' former owners experienced challenges with the air cargo company based in Madrid, Spain resulting from poorly structured client service contracts which allowed for easy, quick and inexpensive service contract termination by clients and unusual maintenance difficulties with a McDonnell Douglas DC-8 financed through Banesto and placed into service on Wet Lease contract with Iberia Airlines in 2009.
Cygnus' air cargo business depends on procuring (generally under capital or operating leases) and operating cargo aircraft in the service of larger cargo operators, particularly Iberia Airlines and TNT Express. The DC-8 experienced unusual maintenance problems forcing its withdrawal from service (and ending its ability to generate revenue) but not eliminating Cygnus' financial obligations to Banesto causing losses of more than $4.6 million from 2010 to 2013. Leonora and his Alas team believe Cygnus would never have incurred these losses with properly structured contracts and proper preventive maintenance programs.
Cygnus suffered even greater preventable losses on two Boeing 767 aircraft leased from Guggenheim Aviation Partners placed into service under a Wet Lease contract with TNT in 2011 which was canceled after only four months of service. Over $14.2 million in lease payments, maintenance and penalty costs were paid by Cygnus from 2011 to 2013 while these planes sat idle generating little or no revenue before being returned to Guggenheim.
After segregating out the above costs, adjusted Cygnus EBITDA from ongoing ordinary operations (unaudited) was $9.2 million for 2010, $6.8 million for 2011, $7 million for 2012 and is forecast for 2013 at $6.8 million.
Also, Grupo ACS subsidiary Imesapi S.A., Cygnus' former majority shareholder, granted Leonora and ATG a 90 day extension, to October 31, 2013, to complete the refinancing of Cygnus debt which is a key component of Leonora's acquisition of the business. In what Alas believes is a strong show of support for their vision and operating plan for the company, Imesapi S.A. also provided Cygnus with a $500,000 bridge credit facility for use during the refinancing period.
"We believe the combination of stronger contracts with customers and the ability to quickly redeploy off-contract aircraft should keep any aircraft from ever sitting idle while still subject to lease payment obligations," said Arnold Leonora, CEO of Alas Aviation Corp. "Moreover, the recent allocation by Imesapi S.A., of $500,000 to Alas in support of our recent acquisition of Cygnus, along with the extension on the deadline to complete the refinancing of the old Cygnus debt granted to us through October, 31, 2013, we believe, are both significant demonstrations of their belief in the promising future of Cygnus and Alas together. We remain steadfast in our determination to close the transaction out of escrow within the revised time frame," he continued.
