A Tucson-area flight school that trains hundreds of students each year has filed for Chapter 11 bankruptcy protection, citing at least $1 million owed to creditors.
The filing follows complaints from some students at International Airline Training Academy that they weren't given training at the school that was promised and paid for. IATA, as the school is known, operates at Ryan Airfield.
The academy's filing follows that of Las Vegas-based Silver State Helicopters, which filed for Chapter 7 liquidation in early February, leaving hundreds of students here and in Phoenix saying they were owed flight-training time or tuition reimbursements.
It is unclear to whom IATA owes money because officials had not filed a list of creditors with U.S. Bankruptcy Court as of late Monday. The bankruptcy petition, filed March 27, lists between 50 and 99 creditors.
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The IATA and Silver State cases also touch on larger issues facing the economy: Fuel prices, which IATA partly blames for its financial troubles, pushed JetBlue Airways to pull its non-stop New York flight from Tucson International Airport last week. And Silver State said in February that an "unprecedented downturn in the U.S. credit market" curtailed the availability of student loans.
IATA, at 6400 S. Aviator Lane, also has been accused by some former students of not providing timely training. In February, 10 students from India told the Arizona Daily Star they were collectively owed more than $120,000, and that they asked the school repeatedly for refunds, to no avail.
The academy's attorney, Scott D. Gibson, blamed the bankruptcy on contracts to train pilots for Chinese airlines that didn't take into account rising costs for fuel and instructors' pay.
"We're trying to do the right thing," Gibson said in an interview Monday. "The main reason we filed is because we had contracts that didn't make sense. We didn't file because we weren't paying our bills."
He said that the school expects the Chinese airlines to contribute more to the students' contracts.
The vast majority of students at the school — about 88 percent — are from China and receive 10-month training in aviation theory, mechanics and flight lessons. Gibson said five Chinese airlines send their pilots to IATA for training.
But the school has faced trouble with non-Chinese firms, court records show. In October 2007, Bank of America sued the school, claiming that IATA owed about $101,000 on a promissory note and $910,000 in loans as of Oct. 19. And in June 2006, a Pinal County man sued and later settled with IATA, saying the school owed him $17,320 in exchange for providing 1,000 hours of flying time on his aircraft, Pima County Superior Court documents show.
Gibson said IATA officials had recently expected an outside company to acquire the academy and absorb the debt, but that did not happen.
In mid-2003, IATA moved its operations to Ryan from Glendale Municipal Airport, purchasing a building and 18 planes from KLM and leasing the land from the Tucson Airport Authority.
Read more of the Star's IATA coverage.