SeaPort Airlines to be liquidated, fleet grounded

PORTLAND — SeaPort Airlines, an 8-year-old commuter carrier that tried to carve a niche serving subsidized routes to small regional airports, grounded its flights Tuesday as it faces liquidation in bankruptcy.

The airline’s bid to reorganize collapsed this month after it learned it would lose a key contract and a line of credit helping keep it afloat. A judge on Tuesday ordered the airline’s Chapter 11 bankruptcy to be converted to a Chapter 7 liquidation effective at noon Wednesday.

“This is certainly not the result hoped for by SeaPort’s employees or its creditors who have patiently cooperated as the company has tried to reinvent itself,” said Douglas Pahl, a partner at Perkins Coie LLP and attorney for the airline’s unsecured creditors. “This is further evidence of the difficulties facing those attempting to service rural, underserved communities.”

Employees would be paid through Tuesday, Pahl said.

Portland International Airport spokeswoman Kama Simonds confirmed SeaPort would cease operations. She said the airport didn’t have information for passengers who booked flights with the airline, and referred passenger inquiries to the airline.

A spokeswoman for the airline could not be reached.

SeaPort was founded in 2008 and was named for its flights between Portland and Seattle’s Boeing Field. It later restructured its business around serving small airports from regional hubs.

It most recently operated flights between Portland and Pendleton, Ore., and it served several smaller airports from a hub in Memphis, Tenn. The commuter airline previously said it planned to continue operating around its hubs in Portland and Memphis.

In a court filing, the airline said it would lose its contract to fly the federally-subsidized route between Portland and Pendleton to a competitor.

It had planned to cease operations at Portland International Airport as it continued its reorganization, but it lost a key line of credit and was unable to find replacement financing to continue operations.

The airline operated five leased aircraft, two of which were stationed in Portland and three of which were stationed in Memphis. It sought permission from the court to complete operations Tuesday so each plane would be at its home base when it entered Chapter 7 bankruptcy proceedings.