=20 ---------------------------------------------------------------------- This article was sent to you by someone who found it on SFGate. The original article can be found on SFGate.com here: http://www.sfgate.com/cgi-bin/article.cgi?file=3D/n/a/2006/11/04/financial/= f094003S58.DTL --------------------------------------------------------------------- Saturday, November 4, 2006 (AP) Military Contracts Buoy World Airways By DANIEL YEE, Associated Press Writer (11-04) 09:40 PST ATLANTA, (AP) -- Inside a World Airways jet, it looks like just another "cattle car" — an all coach-class fuselage crammed with 400 passenger seats. Except for one difference. "It's the only airline where it's, 'Please stow your M-16 under the seat in front of you,'" says Marc Vetterick, the airline's Atlanta station manager. "It's probably the safest airline to fly." That's because World Air Holdings Inc. (the parent company of World Airways and North American Airlines), serves as the largest U.S. troop carrier, and rifles are considered carry-on luggage. As one of the first low-fare airlines in the early 1980s after deregulation, World left the passenger market in 1986 in pursuit of bigger profits by focusing on the military airlift contracts it developed during the wars in Korea and Vietnam. The Peachtree City, Ga.-based company has weathered some turbulence. It posted a nearly $4 million loss for the first half of the year after a pilot strike earlier in the year led to a loss of military business and after being delisted from the Nasdaq for not filing financial reports on time. Yet the company is able to prosper because it regularly fills the Pentagon's needs when few air carriers can divert planes from already scheduled hub-and-spoke routes. "It's sort of in a unique place. A lot depends on the military demand, b= ut in the here-and-now, the U.S. military is pitched everywhere," said Richard Aboulafia, an aviation analyst with Teal Group Consulting in Fairfax, Va. Despite enjoying an abundance of military contracts, the company has been savvy enough to diversify. Besides ferrying troops, World hauls cargo to and from the Far East, transports Texas oil businessmen in luxury to Angola and even takes the National Football League's Jacksonville Jaguars to road games. All on a tiny fleet of 17 MD-11 and DC-10 planes, none of which World Air owns. It doesn't even own the building it is headquartered in. Instead, the company leases. "We're sort of a virtual airline," said spokesman Steve Forsyth. "We bri= ng all of it together, we package it and sell it to customers." Sometimes the customers are people in need of evacuation. World was made famous for the more than 4,000 Vietnamese children it airlifted out of South Vietnam in "Operation Babylift" at the close of the Vietnam War. World and North American also helped evacuate more than 3,000 U.S. residents from Lebanon after Israel battled Hezbollah guerrillas there in July. "They responded quickly," said Greg McCloskey, a vice president of operations for Diplomat Freight Service, an air travel broker for the U.S. Defense Department that coordinated the air evacuations. "World is pretty good. If they can't do it, they just tell you. They don't leave you hanging like a lot of airlines do." The company's biggest customer — the military — was unhappy with World in January because of the nine-day pilot strike. The Pentagon fined World for failing its on-time performance requirements and doled out some of World's troop-ferrying contracts to rivals. That led to World reporting a $3.93 million loss for the six-month period ending June 30; it had reported $15.4 million in income for the same period a year ago. But analyst Helane Becker from The Benchmark Co. said the loss was just a one-time incident and likely won't affect World's future. "They'll be back in the black this quarter," she said. The Nasdaq delisted the company on May 22 after it failed to meet deadlines for financial reports. That forced World to trade in the over the counter market, known as the "Pink Sheets," but Forsyth said it will apply to be re-listed. "We are expecting ... they will get relisted. Obviously, that's pretty positive," Becker said. Despite the financial bumps, Aboulafia said World will continue to perfo= rm well because of the nature of the government transport and cargo business. "Most airlines are beholden to the fickle travel patterns of the general public. But the cargo and government part of the industry is far less cyclical and far more willing to pay — you can pass down higher costs to them," he said. That also applies to World's charter customers. Texas oil businessmen are willing to pay more than $10,000 for first-class service ($4,000 for coach) for World's charter "Houston Express" to Angola. The airline's 14-hour direct flight saves them from having to spend two nights in an airplane with the typical stopovers in Europe or South Africa via traditional carriers, said Mike Weingart, president of the Houston-area Carlson Wagonlit Travel office that helps arrange the flights. Travel broker Bruna Montanari has used World Air to take a group from Mexico to Germany for a World Cup game and regularly seeks out the company to transport pharmaceutical employees from Milan, Italy to Cancun, Mexico, for an annual convention. For the Jacksonville Jaguars, the abundance of seats on their World Airways jet "gives quite a bit of room" to the large pro football players — which under league rules must be given at least 1- 1/2 seats on an airplane — and still have room for others. "Having a plane that size allows us to take a good number of sponsors, suiteholders and other people that can get the excitement of traveling with the team. It's a very popular item," said Paul Vance, senior vice president of football operations and general counsel for the team. "It's nice to have a partner like World." ____ On the Net: World Airways: www.worldair.com/ ------------------------------------------------------= ---------------- Copyright 2006 AP