fter all the talk and meetings I knew we were really going to buy the business the day we bought the plane to take to the Canfield Fair Labor Day weekend. We could have flown it in, but it would have been awfully chancy to take off from the fairgrounds again. So we took the wings off and hauled it in by truck and put it back together again. You can understand that Ruth wouldn't want us to do that with her plane, so we had to buy it." Bonnie Forgac, general manager of the Am Air Flight Centre, paused in her recollection to smile. "You should have seen the men coming in after their day jobs to take the plane apart, load it up, and drive it over to Canfield. They didn't get back till 1 a.m. They never would have done that if they weren't going to be owners."

Last spring, Am Air flight school owner Ruth Miele told her employees that she really was retiring and moving to Florida. She and her husband George Schuster had built the school from ground up at the Youngstown airport over a quarter of a century ago. After Schuster died five years ago, Miele went on running the business, but it started losing money. She put the flight school up for sale, but there were no takers. Now she was proposing to sell off the ai-craft individually.

Supported by a preliminary feasibility study grant from the Ohio Bureau of Employment Services' Rapid Response Unit the Am Air employee buyout association undertook an analysis of why the flight school had been losing money and what it would take to turn it around.

With a money-losing history and only 20 employees--mostly part time, Am Air was a poor candidate for an Employee Stock Ownership Plan. It's hard to keep legal and valuation costs for an ESOP under $15,000, and the Am Air employee group was having difficulty raising funds to buy the planes. Consequently, the employees established a cooperative instead. Co-ops are inexpensive to set up and maintain.

Am Air Flight Centre combines a worker co-op with a consumer co-op. Of the thirteen co-op members who put up $2,500 each for membership, seven are employees of the company and the others are pilots who buy flight time from Am Air. Employees and volunteers receive patronage hours for their work which will become the basis for dividing up the bonus pool (50% of profits) at the end of the fiscal year. Members and their families also receive a rebate on their flying time.

Putting together the employee buyout was not easy. While the preliminary feasibility study was positive and the business plan addressed how to make the flight school profitable -- in part by a wage investment of $2 per hour worked, local banks were concerned by the school's history of losses. Five losing years in a row inspired no confidence.

Ultimately the banks refused to lend without each co-op member co-signing the note for the entire loan. So the co-op members restructured the deal. Each agreed to lend the co-op $8,000; most borrowed that sum individually. Thus each member limited his or her liability to $8,000 rather than the entire purchase price. But the co-op came up 3 members short of what the business plan said was necessary. To make the numbers work, members agreed to suspend principal payments and to accrue the 9% interest on the loans through the slow winter season to maintain working capital, and seller Ruth Miele lent the new company $10,000 to get it off the ground. Employees bought the remaining aircraft, parts, and office equipment in mid-September.

So the new Am Air Flight Centre took off in September with three planes it owned and three on lease-back from area pilots.

As the potential lenders noted, Am Air was a money-losing operation. It's one thing to write a business plan describing how to turn the flight school around; it's another to actually do it. What has the Am Air co-op done to date?

Am Air really has three businesses: it sells flight time to pilots, provides flight and ground instruction, and it runs a pilot shop, which sells instructional materials, maps, and clothes. All were underutilized.

The first task was to get the word out that, rather than being liquidated, Am Air was flying under new ownership. Starting with the Canfield Fair, Am Air co-op members hit the local circuit to publicize the school. As a consequence the school had the busiest fall they have had in years, and today Am Air has more people in ground school than ever before.

Flight time is very seasonal, both for pilots and for students. Those gorgeous spring days bring them out, but November through March can be grim. So the business plan called for expanding pilot shop sales, and co-op members pitched in on weekends to remodel and expand the shop.

"Next year we'll have a catalog out for the pilot shop in time for Christmas -- as well as a web page -- to help keep us profitable next winter when the weather is bad," says Bonnie Forgac.

The third major change was to set up computer systems to track flight and instruction hours and to implement point of sale accounting. During the winter, Am Air has gotten much of that in place for the busy spring season coming up.

"We're financially ahead to date," says Forgac. "Heck, given how we're performing, we'd have the loans paid off -- if we were in Arizona. But flying is seasonal in a state like Ohio. What we really need," as Forgac's eyes lit up, "is to do more with the instrument flying side of the school. We've got the weather conditions in Youngstown for that."

Underlying Am Air's renaissance is member involvement. "We have a very talented group of people as owners," says Forgac. "We've got electricians, lawyers, accountants, mechanics, flying instructors, teachers, software and computer experts, and members who know advertising. Everybody is putting their expertise into it." Biweekly member meetings provide a good forum for discussion and making key decisions.

"Remodeling did more than just open up the offices. It helped open us up too. You can see it in the students' faces. There's a lot of excitement about all the positive stuff that's going on. That excitement feeds on itself and grows. It's exciting for the students and it's exciting for us too."

"The only problem is coordinating all that enthusiasm," Forgac added a bit ruefully. "And, of course, it's difficult to get people motivated to do the mundane things when they are doing what they really like."

"Every time anyone calls, no matter how far fetched their request, no matter how unusual, we try to accommodate them. That's the new attitude. When Ruth owned Am Air, she was the only one who had a vested interest in its success. Now we all have a vested interest in making Am Air work better."