Brazilian airline Gol said on Thursday it is filing for chapter 11 bankruptcy protection in the United States, with a $950 million financial commitment from its controlling shareholder Abra Group, Reuters reported. Abra also controls Colombian carrier Avianca, though the two airlines operate separately. The move makes Gol the latest Latin American carrier to seek bankruptcy protection after a pandemic-related crisis, following the path of its sister company Avianca, Mexico's Aeromexico and Chile-based LATAM Airlines. The decision was somewhat expected by market participants after media reports earlier this month said Gol was considering the move, even as the company maintained it sought a "consensual" restructuring in discussion with creditors.
Scandinavian airline SAS AB will cancel and redeem all of its common shares and commercial hybrid bonds when it emerges from chapter 11 bankruptcy proceedings in the US around June, Bloomberg News reported. “SAS reiterates its expectation that there will be only a modest recovery for general unsecured creditors, no recovery for subordinated creditors and no value for SAS AB’s existing shareholders,” the carrier said in a statement released at 11 p.m. Stockholm time on Tuesday. The airline also set out financial targets for the year having secured a $1.2 billion restructuring last fall with a consortium including Air France-KLM and private equity firm Castlelake LP taking a stake in the ailing company. The debt-burdened carrier had filed chapter 11 bankruptcy protection in July in the wake of the COVID-19 pandemic, high fuel prices and a pilot strike. For the fiscal year 2024, SAS expects revenues of more than 48 billion kronor ($4.6 billion) with debt falling to a range of 22 billion to 24 billion kronor from as high as 39 billion kronor when it emerges from chapter 11, which it expects to happen “around the end of the first half of 2024.” Liquidity is seen increasing to about 11 billion kronor, the airline said.
Spirit Airlines raised its fourth-quarter guidance and outlined steps it is taking to shore up liquidity, after a ruling blocking its sale to JetBlue Airways raised questions about Spirit’s financial future, the Wall Street Journal reported. Spirit also is considering refinancing $1.1 billion in debt due in 2025, the company said in a regulatory filing Friday. The news boosted Spirit’s shares, which had been badly beaten down in recent days following the judge’s ruling, and had slid over the past year as airlines endured escalating costs. Budget carriers in particular have grappled with weaker demand, and an engine problem expected to keep dozens of Spirit planes on the ground this year poses another challenge. Spirit shares were 24% higher in midday trading on Friday after closing at an all-time low on Thursday. Over the three months leading up to Thursday’s close, Spirit’s stock had lost about 57% of its value, according to FactSet data. The Florida-based carrier’s announcements came after U.S. District Judge William Young on Tuesday ruled that JetBlue can’t go forward with its planned $3.8 billion acquisition of Spirit, leaving both carriers facing an uncertain path. The airlines can appeal the ruling but haven’t yet said whether they plan to do so, and some analysts have said challenging the decision would likely be an uphill battle.
Spirit Airlines is examining options to address its financial challenges after a federal judge blocked the low-cost carrier’s deal to be acquired by JetBlue Airways, WSJ Pro Bankruptcy reported. Spirit plans to discuss with advisers a path forward as it faces near-term debt maturities, the people said. The company has roughly $1.1 billion in debt due in September 2025 and the risks surrounding its ability to refinance that debt are increasing, according to a Fitch Ratings report on Wednesday. U.S. District Judge William Young in Massachusetts on Tuesday rejected the $3.8 billion JetBlue deal, siding with the Justice Department in saying that the merger would have reduced competition and harmed travelers who rely on Spirit’s low fares. A representative for Spirit on Wednesday said “while we are disappointed with this outcome, we are confident in our strengths and strategy. Spirit has been taking, and will continue to take, prudent steps to ensure the strength of its balance sheet and ongoing operations.” The airlines can appeal the ruling. JetBlue and Spirit said they were evaluating “next steps as part of the legal process” in a joint statement Tuesday.
Spirit Airlines, opens new tab faces tough choices about its future including looking for another buyer and finding other ways to shore up its finances after a federal judge on Tuesday blocked its $3.8 billion merger deal with JetBlue Airways, opens new tab, industry experts said, Reuters reported. The ultra low-cost carrier has been struggling to return to sustainable profitability amid rising operating costs and persistent supply-chain problems. That has raised concerns about the company's ability to repay its debt that is due to mature next year. The airline this month completed a series of sale and leaseback transactions covering dozens of planes in a bid to repay about $465 million of debt on those jets. But with a recovery in earnings not in sight, some analysts said the company might consider a bankruptcy filing to clean up its balance sheet and reorganize into a financially stronger airline. Helane Becker, airline analyst at TD Cowen, said Spirit is likely to look for another buyer, but that a more likely scenario is a chapter 11 filing, followed by a liquidation. She said the recent capital raise has given the company funds to self-finance a potential chapter 11 filing. "We recognize this sounds alarmist and harsh," Becker said. "But the reality is we believe there are limited scenarios that enable Spirit to restructure." The airline is expected to burn cash over the next several years and will have to continue to raise capital to survive, said Conor Cunningham, an analyst at Melius Research. The airline has been among the carriers hardest hit by a snag with RTX's, opens new tab Pratt & Whitney Geared Turbofan (GTF) engines. It is the largest operator of GTF-powered aircraft in the United States. As a result, it had to ground a number of planes last year. The number of grounded planes is estimated to climb steadily in 2024, from 13 in January to 41 in December. Meanwhile, excess industry capacity in its key markets is hurting its pricing power, forcing the company to indulge in promotional activity with steep discounting to fill up its planes.
Airline SAS AB is set to complete its U.S. chapter 11 process by June following expected regulatory approvals in Europe, according to Chief Executive Officer Anko van der Werff, Bloomberg News reported. That means the process is going according to plan, the CEO said in an interview on Thursday after posting fourth-quarter earnings that saw its adjusted pretax loss widen 30% year-on-year. The Scandinavian carrier filed for chapter 11 bankruptcy protection in July 2022, and in October reached a $1.2 billion refinancing deal with a group of investors, including Air France-KLM and Castlelake. A bankruptcy court in New York signed off on the financing earlier this month. If SAS was an American company, it would likely have emerged from the chapter 11 process in February, van der Werff said by phone. “But we also have to go through a Swedish reorganization, which we’ll do straight after in February or March, and then we’ll have to wait for regulatory approval from the European Commission. So all in all, I expect it to take until June or so,” the CEO said. The €833 million ($915 million) in Danish and Swedish state aid from 2020 was approved by European Union state-aid watchdogs Wednesday, after an earlier approval was struck down by an EU court. The decision was expected by SAS, van der Werff said, adding that “everything is on track, really” in terms of the regulatory processes.
Airline SAS AB received approval from a bankruptcy court in New York for a $1.2 billion rescue package that will see Air France-KLM and private equity firm Castlelake LP become owners in the Scandinavian flag-carrier, Bloomberg News reported. The company filed for chapter 11 bankruptcy protection in July 2022, saying it faced a significant decline in passenger demand during the COVID-19 pandemic as well as a series of pilot strikes and intense competition from low cost air carriers. The agreement will further consolidate Europe’s aviation industry with Air France-KLM having the option to take a controlling interest after two years under certain conditions. The new shareholder group, which also includes the Danish state and Lind Invest ApS, can now provide the ailing airline with $475 million in new equity and $725 million in secured convertible debt. Castlelake is also lending money to SAS to refinance the $500 million outstanding on a chapter 11 loan provided by Apollo Global Management Inc., which lost out to the Air France-KLM consortium, according to a statement late on Tuesday.
The Miami-based parent company of charter airline iAero Airways and aviation maintenance firm iAeroTech, which combined employ 860 workers, is slated for bankruptcy auction, the South Florida Business Journal reported. iAeroAirways lists its headquarters as being located in Miami with its operational headquarters at Piedmond Triad International Airport in Greensboro, where it is believed to employ fewer than 100. The company was founded in 1997 as Swift Air, which iAero Group acquired and rebranded as iAero Airways in 2019. It operates a fleet of 42 aircraft. U.S. Bankruptcy Judge Robert A. Mark approved the auction and bidding procedures for AeroTech Miami on Oct. 17. The bid deadline is Dec. 1, the auction takes place Dec. 6 and a court hearing to confirm the auction result is scheduled for Dec. 13 in Miami. The minimum purchase price is $216.3 million, which represents the value of AeroTech’s secured loans with Synovus and BXC Bridge, an affiliate of Blackstone. Under the judge’s order, BXC Bridge is allowed to submit a credit bid, but it must include enough cash to repay the Synovus loans.
Shareholders of Western Global Airlines (WGA) have requested the U.S. Bankruptcy Court in Delaware to dismiss or reduce to zero, claims arising from a class action suit claiming prohibited financial transactions relating to the company's employee stock ownership plan (ESOP), CH-Aviation.com reported. The U.S. Department of Labor (DOL) is also investigating the circumstances of the ESOP transactions. The Neff family shareholders are seeking a court order subordinating the ESOP claims to those of general unsecured creditors to be reduced to zero or disallowed entirely. On October 17, WGA and its debtor subsidiaries in chapter 11 protection filed their objection to the class action, arguing the ESOP claims be disallowed for purposes of voting on the airline's restructuring plan. A court hearing has been scheduled for November 13 before Judge Karen B. Owens, but the court may grant the order without further notice or hearing if no responses to the shareholders' objection are filed.
A U.S. bankruptcy court judge granted SAS AB’s request to speed the process of paying $3 million to advisers of the Scandinavian airline’s investor group, keeping its restructuring on track over opposition from creditor Apollo Global Management Inc., Bloomberg News reported. Judge Michael E. Wiles set an Oct. 12 hearing on a motion to expedite reimbursement to advisers to the group led by Air France-KLM and Castlelake LP, who are set to take control of SAS as it exits from chapter 11 protection. SAS’s request appeared to be “in the best interests of the debtors, their estates, their creditors, and all parties in interest,” the judge said in a court filing on Tuesday. Apollo had objected to the expedited hearing, arguing that the move would make it harder to prevail on its plan to object to the payment. It added that it won’t have enough time to review and respond to the reimbursement motion. Apollo provided a $700 million debtor-in-possession term loan to SAS as it went through chapter 11 reorganization. While the U.S. equity firm reportedly sought to buy a majority stake, SAS last week chose rival Air France-KLM group, which also includes the Danish state and Lind Invest ApS.
