Falcon Air filed for bankruptcy under Chapter 11 of the bankruptcy code last week, citing rising fuel prices, coupled with older aircraft - 727s - that are fuel inefficient and require expensive maintenance checks. These factors prevented the company from competing effectively on bids for business. Falcon Air did not return phone calls by press time; however, Chief Executive Emilio Dirube told the Miami Herald that he had priced himself out of the business.

The company laid off 73 of its 169 employees but will continue to fly under Chapter 11 while it reorganizes. In operation since 1996, the company listed in its filing the largest debts, include $19.3 million to Pegasus Aviation, $7.1 million to the U.S. Treasury, $1.3 million each to RPK Capital Management and the Miami-Dade Aviation Department. It listed $47 million in liabilities and $12.9 million in assets, according to the Herald.

Falcon Air has returned most of its 727 aircraft to lessors but retains an MD-82 and MD-83 for its subcontracts for Venezuelan carrier Aeropostal. It hopes to lease three more MD-83s. Falcon flies for the Defense Department, universities, tour operators and cruise lines. It also has had contracts with Bahamasair and Cayman Airways.

It was involved in the infamous high school charter scandal from Oregon to Mexico during which the operator violated FAA regulations by leaving the cockpit door open and permitting passengers into the cockpit during flight. The airline terminated two flight attendants who served liquor to underage drinkers and ran a wet t-shirt contest. It also suspended the pilots and retrained them.

Falcon is planning to file a reorganization plan in the near future. The court approved a $350,000 interim financing deal with Jet Global, an affiliate of BCI Aircraft Leasing of Chicago, to cover payroll, according to the Herald, which also quoted Dirube as saying the finance company has committed $1 million in financing and to lease aircraft to the charter airline.