By JONATHAN CANNON and KATHY WILLIAMS

HERALD DEMOCRAT

The hangar at Air Safety Flight Academy was shut Tuesday, and while a few students still walked the dormitory halls, Air Safety Flight Academy's vice president said flight school is out, maybe until fall.

Backed by more than $100,000 in economic development incentives from Sherman, Denison and Pottsboro, Air Safety Flight Academy began flight training operations in November at North Texas Regional Airport.

Air Safety Flight Academy President Dee Pinkston wrote in a press release delivered through e-mail Tuesday that his company had temporarily suspended all operations, effective Sunday.

"Air Safety Flight Academy suspended Air Safety Flight Academy does not know the length of this suspension but hopes that it is short," Pinkston wrote.

"The suspension is a direct result of the poor economy coupled with the fact that Air Safety's two biggest Chinese clients owe Air Safety Flight Academy more than $2 million. Air Safety is unable to carry the Chinese indebtedness and continue operations. What has further aggravated the situation is the paucity of available funding in the Untied States for domestic students to undergo commercial pilot training. This is a very difficult time we are experiencing, and we hope that we can resume training this year."

Denison Development Alliance President Tony Kai said during the vetting process, the Alliance had the opportunity to review the Air Safety Flight Academy's financial health, but he didn't recall the $2 million of receivables.

"No matter who we evaluate, ... there's no way to know if that receivable is collectable," he said. "In the end you can't be absolute about anything."

Air Safety Flight Academy Vice President Case Collins said the company currently is working with students to find them a place to continue their education with different training organizations. Students may stay, he said, if they want to stick it out here untilAir Safety Flight Academy gets back on its feet.

Collins said he had recommended that the other three staff members begin searching for something to get them through the interim. "It's a tough situation anyway you look at it."

Student Anirudh Rae said instructors told students Sunday to suspend flying until further notice. Asked if they had just been hanging around since the notice, he said yes.

Bill Retz, project manager of marketing at Regional Mobility Authority (the airport's governing body) who helped broker the deal among the company, the three cities, Grayson County and GCC in August, confirmed he had heard the academy has "temporarily suspended operations." He declined to comment further, saying he had communicated with Pinkston by e-mail and had not talked to him by phone Tuesday.

Sherman Economic Development Corp. and Denison Development Alliance each provided about $1,500 per job up to 30 jobs and Pottsboro committed to paying approximately $500 for those jobs. This was to enticeAir Safety Flight Academy to locate at the airport. Sherman Economic Development Corporation's first payment towards its $45,150 commitment, $27,090 was contingent upon the Academy's brokering a contract with Grayson County College and securing an occupancy permit for Hangar 111 at the airport. Both those conditions were satisfied by the Oct. 9 date. The same is true for Denison Development Alliance and the Pottsboro Community Development Corp., although Pottsboro's payments are less than its larger partners.

The full requirements to realize the total amount per job were that Air Safety Flight Academy had to create and maintain at least 30 full time employment positions with a minimum salary of $15 per hour. The flight school company also agreed to invest $1 million in capital improvements at its facility at North Texas Regional Airport.

Sherman Economic Development Corp. President John Boswell said Tuesday afternoon that he had not received anything in writing fromAir Safety Flight Academy about the suspension of activities. This notice is called for in the contract. The contract also states that Air Safety Flight Academy will forfeit any payments to SEDCO if it is not in compliance with the terms of the agreement throughout its effective period.

ASFA has 30 days to "cure" any compliance issues with the contract. The term of the contract was from Oct. 1, 2009 until March 31, 2011. Otherwise, the payments are subject to the "clawback" provision of the contract, which requires repayment of funds to the economic development corporations. Pinkston did not address the economic incentives in his statement. Each of the three economic development corporations, funded through sales tax dollars, had a separate contract withAir Safety Flight Academy.

Grayson County College Vice President for Business Services Giles Brown said the only contract the college has with Air Safety Flight Academy is a lease of dormitory space for students, and possibly instructors of the flight school.

Brown said college staff had cleaned out the third floor of the Jensen Dormitory which is located at the West Campus at the airport.

The college and Air Safety Flight Academy had worked toward an academic contract as well, but had never reached an agreement, Brown said.