COLUMBIA, S.C. (AP) - Air South needs to find a buyer by the end of today or else liquidate its assets.
Talks continued this morning between Air South officials and a potential investor, airline vice president Tom Volz said. He wouldn't identify the interested party but said it has experience in the airline industry, primarily in North Carolina.
The bankrupt carrier must make a $110,000 insurance payment today on the five Boeing 737 jets it still is leasing. If the payment isn't made, the company that owns the planes can repossess them.
"I'd say it's a toss of the coin," Volz said. "You never know what the other party's resources are. We hope they were able to marshal them up over the weekend, or make arrangements with the insurance company. But Air South itself has run out of time with the insurance company."
If the investor decides not to move forward, Volz said company officials would sit down with attorneys to discuss converting Air South's Chapter 11 bankruptcy case to a Chapter 7 liquidation.
If that happens, the Jobs Economic Development Authority can use the cash to pay down the $12 million federal loan guaranteed by the state when the discount carrier was launched.
South Carolina taxpayers have footed the bill since Air South's 1994 beginnings, and because the airline has filed for bankruptcy protection, the state might get stuck paying about $16.8 million altogether.
South Carolina already has paid $5.5 million toward the loan, while the airline paid only $172,189 in interest over three years, The (Columbia) State reported Sunday.
During the next six years, the state is scheduled to pay $11.3 million in interest and principal.
The state had borrowed the federal money from the U.S. Department of Housing and Urban Development, then loaned it to Air South. The $12 million loan was part of a $17 million state and local incentive package to get the airline started.
The state government, led by then-Gov. Carroll Campbell, wanted Air South based here to create jobs in the Midlands and to reap other economic benefits.
"We would have been better off renting a plane and throwing dollars bills from it," said state Sen. Ernie Passailaigue, D-Charleston.
Campbell did not return a phone call seeking comment Sunday.
Former Commerce Secretary John Warren helped piece together the public financing deal.
"At the time, it was assessed to be a prudent thing to do," he said. "You can't look at life in retrospect. You have to assess the risk at the time."
Warren said Air South benefited the state by way of 700 jobs for three years and lower air fares for many travelers.
State Sen. John Courson, R-Columbia, said he was frustrated the General Assembly never got a chance to vote on the loan. He said Campbell's office sealed the deal without legislative debate.
"If the government has to get involved in providing a loan instead of the private sector, then it is a risky venture from the genesis," Courson said. "Obviously the airline's economic situation was shaky from the beginning. It was destined to fail, and that's exactly what happened."
When Air South suspended operations Aug. 28, it reported $67.4 million in liabilities against $11.5 million in assets.