Aero Union misses first Chico hangar lease payment

CHICO Aero Union, which has relocated to Sacramento, has missed its first lease payment for Chico airport space, according to the Chico city manager.

The monthly payment of $20,000 was missed in August, said Dave Burkland on Wednesday.

Burkland said Aero Union's payments for five hangars and a building ground lease had been made regularly to this point.

"We're concerned."

Burkland said the city has been trying to reach Aero Union, which moved to Sacramento's McClellan Business Park, the former McClellan Air Force Base. A letter has been sent to the company, and phone calls made, Burkland said.

In July, the U.S. Forest Service announced it had canceled its contract with Aero Union for its six P-3 Orion air tankers to fight wildland fires because of questions about the aircraft airworthiness.

Aero Union executive Britt Gourley was quoted by the Sacramento Business Journal in an Aug. 26 news article that the company is in "a sort of hibernation mode," but was planning to appeal the Forest Service decision.

Gourley told the newspaper the Forest Service concerns about the airworthiness of the aircraft were "misinformation" in order to break the contract.

He maintained his company was not out of compliance with Federal Aviation Administration regulations, according to the newspaper, which reported that Gourley is hunting for other contracts in and outside of California.

The E-R tried several times to reach Gourley for a comment.

In the article, Ian Gregor, a spokesman for the FAA's Pacific Division, said Aero Union has not proved its aircraft are in compliance with a mandatory structural inspection program.

Once employing more than 200 in Chico, Aero Union has been reduced to about five individuals, the report said, after laying off 60 last month. Layoffs also occurred as the company relocated to Sacramento.

Those 60 included 15 to 20 commuting workers from Chico, who were told to pick up their belongings by Sept. 15.

A former Aero Union official in Chico, Vic Alvistur, said he'd been told by laid-off workers that Aero Union would close in Sacramento.

Employees who relocated to Sacramento signed a confidentiality agreement not to talk to the media.

In 2005, Aero Union was sold to a Seattle-based investment group, Lake Union Capital Partners; a key executive died in 2009; and the new owners relocated the company to Sacramento's McClellan Business Park starting in 2010 and finishing this summer.

After pulling its manufacturing, maintenance and repair divisions out of Chico, Aero Union continued to make payments on the six buildings it leased from the city at the Chico Municipal Airport.

One building has since been subleased to a Chico company, which in turn leased space to a Redding helicopter school.

Burkland said the city generally considers a contract in default 30 days after a payment is due.

"I've talked to our staff, and they're coming back with a proposal," Burkland said, adding that he is still trying to talk to someone at Aero Union.

"The way I handle it, I like to talk directly to someone."

He said until this point that Gourley had made good on the agreement to continue lease payments on empty buildings.

Burkland said the city has been communicating with an existing airport business that might be interested in leasing one of the Aero Union hangars.

"It's an aviation manufacturer and suitable for one of the hangars."

Federal Aviation Administration regulations that cover hangar use require a business be aviation-related.

"It's exactly who we're looking for," said Burkland, who said it was too early to identify the company.

It comes down to the city determining if the lack of payment breaches the contract with Aero Union, and then what agreement could be reached with the interested company.

Burkland hopes to have some decisions over the next few weeks.

If Aero Union does default, the city would inspect the hangars and buildings, do repairs and clean out what's left, he said.