Evergreen Flies Its Last Flight, Union Says

Dec. 5, 2013
Closure ends a storied, three-decade history for a business whose baggage includes close ties with the CIA.

Dec. 03--Evergreen International Airlines Inc., the troubled McMinnville-based cargo carrier, flew its final military flight last Friday and all remaining aircraft are now parked, according to a pilots' union memo obtained by The Oregonian.

The memo sent Monday to Air Line Pilots Association members said Evergreen managers would meet with lienholders Tuesday. Signed by James B. Touchette, chairman of ALPA Local 118, the memo told union members that their latest pay would be delayed until Thursday.

"A meeting is slated to take place with the lienholders and Evergreen management tomorrow," Touchette wrote Monday, "and the creditors' decision may take some time."

Closure of the company -- originally scheduled for last Saturday, but denied as false rumor by founder Delford Smith -- would end a storied, three-decade history for the airline whose baggage includes close ties with the CIA. Evergreen once operated a global fleet of Boeing 747 cargo jets, running round-the-world flights and keeping a plane on standby for secret U.S. military missions.

Several Evergreen companies founded and owned by Smith have been major Yamhill County employers, as have the 83-year-old's nonprofits, which include a water park and an air-and-space museum. Managers say the attractions will remain open. But the Oregon Department of Justice is investigating them for alleged commingling of funds between Evergreen's profit and nonprofit arms, and Smith may have put up some of the planes in the museum as collateral being claimed by creditors.

Mike Hines, chairman of parent company Evergreen International Aviation Inc., did not return phone calls Tuesday. Voicemails left for Hines posed questions concerning the airline's remaining property, employees, contracts and its Federal Aviation Administration certificate, a potentially valuable asset.

Hines told The Oregonian Monday the company was still operating and managers hoped to save it. But an airline can't function after letting go its operations director and closing its dispatch center, which workers and former employees say occurred at McMinnville headquarters Monday.

Evergreen International Airlines' last flight apparently occurred early Monday. A well-traveled Boeing 747-400 cargo jet made a short hop from Travis Air Force Base, Calif., to Victorville, Calif., according to former employees and reports by workers who said they crewed the 46-minute flight. The 747-400 -- the same one that flew Evergreen's last military flight, from Yokota Air Base, Japan, to Travis -- had arrived at Travis after midnight Thursday from Yokota.

A FlightAware activity log shows the freighter had hopscotched just since Friday from Hickam Air Force Base, Hawaii, to Travis to Elmendorf Air Force Base, Alaska, to Osan Air Base, South Korea, to Yokota and back to Travis -- and then on to Victorville. In addition to its federal prison, Victorville is known for one of the nation's busiest "boneyards" -- where unneeded commercial planes go to be stored or to die and be chopped up for parts.

Some leased Evergreen cargo jets have been repossessed by creditors, according to public records and former union officers.

Evergreen International Airlines had 215 full-time employees as of September, according to a filing with the U.S. Bureau of Transportation Statistics -- down from a peak of 950 in 1991. The bureau classifies the company as a Group II airline, meaning it has annual operating revenues between $100 million and $1 billion. The privately held company hasn't disclosed revenues since 2004, when it had to do so in order to market junk bonds.

But former managers say Evergreen has long depended on heavy borrowing, leasing most or all of its aircraft and engines, many of which are now being claimed by creditors.

Creditors seeking millions of dollars in damages have filed numerous lawsuits, some of which have produced default judgments as Evergreen lawyers fail to show up in court. Air Line Pilots Association officials cite an August ruling by a Yamhill County judge finding that the airline owes Evergreen crew members $1.4 million in overdue contributions to a pension plan.

The memo sent Monday by ALPA's Touchette, a former Evergreen pilot, said the union had filed a grievance on behalf of the last crew members employed at Evergreen. It alleged that management failed to provide a two-week written furlough notice required by the labor contract.

Former employees said one of Evergreen's few valuable assets could be its airline certificate issued by the FAA. Smith founded the airline by having his Evergreen Helicopters Inc. buy Johnson Flying Service, in 1975 a tiny, struggling company in Missoula, Mont., that held the coveted certificate.

The crucial document allowed Evergreen to branch out from its status as a helicopter company to operate fixed-wing aircraft. In March, Evergreen sold off its helicopter division for as much as $267 million to Erickson Air-Crane Inc., intending to use the proceeds toward $300 million in debt.

Evergreen's FAA certificate is supplemental, a type that has become relatively rare as the federal agency converts airlines to so-called flag certificates. Supplemental certificates differ from flag certificates in many ways, former union officers say.

The main difference is supplementals ease restrictions so a non-scheduled operator can run a charter service, enabling customers to book flights at will. Supplemental certificates also allow carriers to go almost anywhere in the world, to keep records differently and to use alternate manuals for dispatch and communications.

Unless Smith has already sold the rights separately, Evergreen's certificate may include authority for the holder to fly cargo routes to and from Asia, Latin America and elsewhere. At one time Evergreen had authority to fly almost anywhere, and it may still.

However, a buyer could only acquire the certificate if it bought the airline, which would come with mountains of debt.

If a start-up airline or an established company -- such as Evergreen competitor Atlas Air Worldwide Holdings, which has a flag certificate -- -- bought the McMinnville-based airline, the buyer would also inherit ALPA Local 118, which travels with the certificate, according to former union officers. It's debatable whether a buyer would honor the connection between the union and the certificate, however. The union continues providing certain services to ALPA members who have lost representation.

Evergreen may file Chapter 7 bankruptcy, or be forced to do so. Federal law allows three or more creditors to file an involuntary bankruptcy. In most cases Chapter 7 would block suits and appoint a trustee for an orderly liquidation.

On Monday, Hines declined to comment when asked whether Evergreen would file Chapter 7. ? He also wouldn't comment on whether managers planned to shut down the company, or whether they were talking to potential financial backers.

"Everything's still status quo," Hines said.

-- Richard Read

Copyright 2013 - The Oregonian, Portland, Ore.