Channel: Daily Bankrupt Company Updates | Bankrupt Company News
Viewing all articles
Browse latest Browse all 4593

Ravn Air Group, Inc. – Alaska’s Largest Regional Airline Files Chapter 11 as COVID-19 Leads to 90% Drop in Revenues


April 6, 2020 – Ravn Air Group, Inc. and seven affiliated Debtors (“Ravn” or the “Debtors”) filed for Chapter 11 protection with the U.S. Bankruptcy Court in the District of Delaware, lead case number 20-10755. The Debtors, Alaska's largest regional air carrier and network, are represented by Victoria Guilfoyle of Blank Rome LLP. Further board-authorized engagements include (i) Keller Benvenutti Kim LLP as general bankruptcy counsel, (ii) Conway MacKenzie as financial advisors and (iii) Stretto as claims agent. 

The Debtors’ lead petition notes between 1,000 and 5,000 creditors; estimated assets between $100.0mn and $5000.0n; and estimated liabilities between $100.0mn and $500.0mn. Documents filed with the Court list the Debtors’ three largest unsecured creditors as (i) Olivery Wyman, Inc/Cavok ($2.2mn trade debt), (ii) Crowley Fuels Alaska ($1.6mn trade debt) and (iii) Standard Aero ($1.3mn trade debt).

In a press release announcing the filing, the Debtors advised that “RavnAir Group today announced that due to the global COVID-19 pandemic and the unprecedented loss of 90% of passenger revenue at all three of its airlines (RavnAir Alaska, PenAir, and RavnAir Connect) it must, for the time being: 

  • Park all seventy-two (72) of its aircraft;
  • Stop all operations; and
  • Temporarily lay off all remaining staff until the company is in a position to cover the costs of rehiring, resuming flights, and operating to the many communities it serves throughout our State.

Because of the company’s critical need for additional funding, Ravn has also filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code in the U.S. Bankruptcy Court for the District of Delaware. Ravn’s lenders have agreed to provide financing during the pendency of the Chapter 11. This filing will allow the company to 'hit pause' and await word on its Federal CARES Act grant applications and other sources of financial assistance that will allow it to get through the Coronavirus crisis and successfully restart operations. The company is also actively seeking private investment as well." 

Events Leading to the Chapter 11 Filing

In a declaration in support of the Chapter 11 filing (the “Mannion Declaration”), John Mannion, the Debtors' Chief Financial Officer, detailed the events leading to Ravn’s Chapter 11 filing. The Mannion Declaration states: "Because of Alaska’s harsh winter climate, the Debtors’ businesses are highly seasonal. Their operations tend to consume cash during the last and first quarters of each year, when they must cover capital costs and costs associated with the maintenance of their extensive route network and aircraft fleets. The business model relies heavily on cash flow received during the summer tourism season in the second and third quarters of the year, when passenger revenues are highest. Indeed, given the capital-intensive nature of the Debtors’ business, strong financial results in the summer and fall months are essential to the Debtors’ survival.

On March 12, 2020, after several months of increasing outbreaks around the world, and the World Health Organization declaring COVID-19 to be a pandemic, the Governor of Alaska announced the first case of coronavirus in Alaska on live television. Prior to that point, travel restrictions had already been instituted around the world and in the United States, which caused airlines across the country to experience substantial revenue losses as a result of decreased sales and canceled flights.

These same effects hit Alaska on March 12. It was at that time that airline bookings at the Company dropped dramatically, with the Company experiencing an astonishing 80-90% decrease in passenger revenue at all three of its airlines, as compared to the Company’s historical results for the same period. In addition, in mid-March, the Company, along with other Alaska carriers, began receiving demands from rural hubs and villages around Alaska not to fly passengers to or from their communities. Finally, on March 20, 2020, the State of Alaska published Health Alert 9.2, issuing a strong advisory to all Alaskans to cease any non-essential in-state long distance personal, business, or medical travel. In total, this caused an unprecedented drop in passenger traffic and passenger revenue placing Ravn in a significant negative cash flow situation. 

Prepetition Debt

Ravn Air Group, Inc. is party to a July 2015 credit agreement (the “Credit Agreement”), with certain lenders (collectively, the “Prepetition Secured Lenders”) and BNP Paribas, as administrative agent, comprised of a $95.0mn term loan and a $15.0mn revolving loan. As of March 31, 2020, the Debtors owed approximately $90.9mn, exclusive of interest and fees, under the Credit Agreement.

About the Debtors

Ravn Air Group was formed through the combination of five well known and long-tenured Alaskan air transportation businesses in 2009, creating the largest regional air carrier and network in the state. Ravn owns and, until the COVID-19-related disruptions, operated 72aircraft, at 21 hub airports and 73 facilities, serving 115 destinations in Alaska with up to400 daily flights. Until the COVID-19-related disruptions, the Debtors had over 1,300 employees(non-union), and it carried over 740,000 passengers on an annual basis. The Company provides air transportation and logistics services to the passenger, mail, charter, and freight markets in Alaska, pursuant to U.S. Department of Transportation approval as three separate certificated air carriers.

Read more Bankruptcy News

The post Ravn Air Group, Inc. – Alaska’s Largest Regional Airline Files Chapter 11 as COVID-19 Leads to 90% Drop in Revenues appeared first on Daily Bankrupt Company Updates | Bankrupt Company News.

Viewing all articles
Browse latest Browse all 4593

Latest Images

Trending Articles

Latest Images