Western Sun Aviation Departs Chapter 11 : Ailing Firm’s White Knight Doesn’t Fit the Stereotype

Most corporate rescues are made by a knight riding atop a white horse who has made his fortune wheeling and dealing.

Western Sun Aviation’s white knight doesn’t fit the stereotype.

Instead of a horse, he has flown in on a $125,000, six-passenger, twin-engine turboprop Beechcraft.

His wheeling was running a Del Mar pizza parlor, and his dealing is as landlord to Mrs. Fields’ Cookies in La Jolla and several other small commercial properties.

But Western Sun isn’t complaining, because La Jolla businessman Lincoln Foster’s $400,000 cash infusion and assumption of $800,000 in debt has allowed the charter airline firm to emerge successfully from its four-year Chapter 11 reorganization.

Hit hard by spiraling oil prices in the early 1980s, the elimination by the Reagan Administration in 1981 of federal aid for flight training and by a questionable business strategy of guaranteeing lease payments on the planes it sold, Western Sun filed for bankruptcy protection from creditors in May, 1982.

Liabilities totaled $1.7 million, although the total claimed eventually rose to about $5 million. A trustee was appointed for the company, which was founded in 1976 and grew rapidly until 1981.

By all appearances, the company seemed headed for liquidation.

But the trustee determined that the “liquidation value would yield virtually nothing to creditors, and so he decided . . . to keep the business operating,” according to David Butler, Western Sun’s president.

Under the reorganization plan, Butler and company Vice President S. Douglas Henderson each own 10% of the company, while Foster owns 80%.

At a press conference Wednesday, Butler, Lincoln and Henderson predicted that, because of Lincoln’s capital infusion, creditors could be paid off the $1.25 million owed to them within four years. The first $350,000 payment will be made next month, according to Butler.

In addition, officials boldly predicted that the company’s $2.3 million in revenues for the year ended June 30, 1986, could double during those four years.

The forecast is based on the company’s profitable operations for the past two years and on increased activity among the county’s 9,000 private pilots, 600 of whom Western Sun claims as its customers.

Local airports have recently reported increased activity--Montgomery Field has nearly doubled the number of takeoffs and landings through Nov. 30, 1986, to 220,384; Gillespie Field has reported a 2% increase in its operations, to 101,635 takeoffs and landings for the six months ended Dec. 31, 1986. Western Sun, with rented facilities at both Montgomery and Gillespie fields, has 40 leased airplanes in its inventory, most of them two-to-six-passenger Piper single- and twin-engine planes.

The company employs about 40 people, 50 less than when it filed for bankruptcy, Butler said.

For Foster, who opened the Carnegie A-440 pizza restaurant in Del Mar while a graduate student at UC San Diego in 1972, the purchase of Western Sun is purely “an investment.” He sold the pizza parlor in 1983 and since has concentrated on his commercial real estate holdings.

“I was looking for a way to combine aviation and business,” said Foster, a private pilot and an aviation enthusiast for 23 years.

Foster--a founder, director and 5% owner of Scripps Bank and principal of A-440 Enterprises--will take over as Western Sun chief executive at least for the next 90 days, after which he said he will turn over daily operations to Butler.

The Foster deal closed on Dec. 31; there was some pressure to finalize the arrangement in 1986 and before the new tax law so that Western Sun could use its $750,000 in accumulated tax loss carry-forwards, Butler said.

The company officially emerged from bankruptcy on Dec. 1, 1986.

Foster was not the only party interested in Western Sun’s charter and flight-training operations.

Butler and Henderson made a bid last year but were prohibited by bankruptcy law from buying the company because of their insider positions.

And National University also made an offer. The private adult education enterprise would have converted the firm to an all-training business, Butler said.