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Evergreen International Airlines going out of business?

Its story is the stuff of Alaska aviation legend, though it moved from the 49th state to Oregon some years ago. Evergreen International Airlines on Friday denied rumors swirling up the West Coast that it was going out of business after more than a half century supporting oilfield operations and perhaps even covert government missions from Alaska's North Slope to the oil-rich Persian Gulf. But the McMinnville, Ore.-based company acknowledged it was facing financial difficulty.

"Rumors that a decision has been made to cease operations at this time are false," said Del Smith, CEO of the airline's parent, Evergreen International Aviation, responding to a report in Yamhill Valley News-Register of Oregon that cited an employee who claimed that Evergreen would go out of business Nov. 29.

Boosted by Prudhoe Bay

Evergreen International Airlines began with an Alaska helicopter operation in 1961, and was well positioned to capitalize on the oil boom of the discovery of Prudhoe Bay in 1969 and the construction of the trans-Alaska pipeline in 1976.

Owner Del Smith grew that small helicopter company, originally called Johnson Helicopters, into a broad aviation-services company that provided cargo hauling, aircraft sales and leasing, ground aircraft handling across the country and aircraft maintenance. It's been headquartered in Oregon more than 20 years.

Despite the diversification, the heart of the company was its now-faltering air-cargo business with a fleet of a dozen Boeing 747 and 757 aircraft. Their distinctive green and white motif is frequently seen in Anchorage as they refueled on trips to and from Asia.

Evergreen also "wet leases" planes to other airlines, providing planes and crews that fly under other airlines names.

One of those planes, flying as Japan Air Lines in 1993 hit "severe or possibly extreme turbulence" upon departing Anchorage, and one of its four engines broke off the wing. Despite severe pitch and roll, it managed to return to Anchorage safely. The incident resulted in a number of aviation industry changes, including more use of Doppler radar and strengthened engine mounts.

Years ago, Evergreen also provided wet-lease aircraft to the aviation pioneer Wien Air Alaska, which has since shut down.

Fewer Department of Defense contracts

In a story about the company's growth tied to its 40th anniversary, the Alaska Journal of Commerce reported Evergreen revenues at $700 million a year. The privately held company no longer makes financial information public.

The company has said that it has had financial difficulty in recent years due to fewer contracts from the Department of Defense, a key customer.

A further financial blow may have come from the loss of business from the Central Intelligence Agency. The Oregonian newspaper in the 1990s detailed Evergreen's long ties to the spy agency.

Much of that history is secret, or at least disputed, but one part became public when an Evergreen International Airlines plane spirited the Shah of Iran out of the Middle East after his overthrow.

In Alaska, Evergreen has been sued twice recently by fuel suppliers complaining that the company wasn't paying its bills.

Financial problems mount

Evergreen has been "adversely impacted" in recent years by reduced defense spending, as well as global economic weakness, the company said in its statement Friday.

Flint Hills Resources-Alaska saw what may be evidence of that, said company attorney Joe Sheehan. "After we got their attention, they recognized the fact that they owed the money and they paid it," Sheehan said.

Flint Hills operates the North Pole refinery that is a major producer of jet fuel, but said it was was forced to sue in 2012 when it wasn't paid.

"I don't know Evergreen's finances, but the fact that they didn't pay us suggests they might have financial problems," he said.

Yet to be paid is Anchorage Fueling and Service Co., which in June went to court to try to get paid for fuel it provided to Evergreen.

"It's very basic, they didn't pay the bill," said Mike Seville, representing Anchorage Fueling.

Evergreen's Smith, in his statement, said the company was trying to stay in business, despite the reduced revenue.

"Management has moved aggressively to address these challenges, including through the divestiture of businesses and assets and the significant reduction of secured debt," Evergreen's statement said.

That's included sale of Evergreen Helicopters, a fixture in Alaska since 1961. It had between 100 and 200 employees in Alaska, according to Alaska Department of Labor and Workforce Development data as of 2010.

That Evergreen division was sold earlier this year to Erickson Air-Crane of Portland, Ore., a financially strong company that paid $250 million for the operations in Alaska, Louisiana and elsewhere.

Seville said that was news to him. "I don't know where that money's gone," he said.

Subsidiary Evergreen Eagle at Anchorage airport

Another Evergreen operation, an aircraft maintenance and storage operation called Evergreen Air Center in Marana, Ariz., has also been sold.

Another subsidiary, Evergreen Aviation Ground Logistics Enterprises, known as Evergreen Eagle, also does business at Ted Stevens Anchorage International Airport.

Airport leasing manager Debra Herrick said Evergreen EAGLE is registered to do business there, but she didn't know how many airlines it contracted with to provide ground-handling services.

Messages left with local Evergreen EAGLE and Oregon Evergreen International Aviation offices were not returned Friday.

The company's statement on its website Friday indicated that it was attempting to remain in business.

"Evergreen is in discussions with its significant constituencies and is exploring available strategic alternatives with those constituencies," the statement said.

The News-Register of McMinnville reported Friday that airline employees were being told in voice mail messages that the operations would cease Nov. 29.

Despite Evergreen's denials, late Friday the Portland Business Journal reported that Evergreen International Airlines has filed a WARN Act notice of impending layoffs with the state, and would lay off 131 employees and "cease operations."

Not all WARN  Act notices result in closures, however. They are sometimes filed to ensure compliance with the law, even as companies are continuing to fight for life.

Outside the aviation industry, Evergreen may be best know for its affiliated non-profit museum in McMinnville that houses Howard Hughes' huge Spruce Goose prototype transport and other aircraft.

Contact Pat Forgey at pat(at)alaskadispatch.com