BROOKLYN, N.Y. - (Mealey's) Global Aviation Holdings Inc. (GAH), the largest charter airline provider to the U.S. military, filed for Chapter 11 bankruptcy Feb. 5 in the U.S. Bankruptcy Court for the Eastern District of New York, citing $493.2 million in debts (In Re: Global Aviation Holdings Inc., No. 12-40783, Chapter 11, E.D. N.Y. Bkcy.).
GAH, the leading provider of customized military, cargo, personal and commercial charter air transportation services, lists assets of $589.8 million.
GAH operates two airlines, World Airways and North American Airlines, consisting of 30 planes and 1,800 employees.
GAH Executive Vice President and Chief Financial Officer William A. Garrett filed a brief supporting the Chapter 11 petition. Garrett said that although GAH is an industry leader, its business has been adversely affected by reductions in budget for the U.S. Department of Defense and the decrease in demand due to the end of the war in Iraq.
Moreover, Garrett said that due in part to the global recession, GAH has suffered a significant decrease in demand for commercial cargo services, resulting in a substantial decline in commercial revenues.
While GAH has navigated fluctuations in demand in the past, the current decrease, coupled with high labor and fixed costs, excess aircraft and an overleveraged balance sheet, requires GAH to restructure, Garrett added.
Garrett said that GAH has outstanding prepetition debt of $244 million, for which it does not have capacity based on the fact that GAH's earnings before interest in 2011 were $35.7 million - a decrease from 2010 when GAH brought in $115.2 million.
GAH is represented by James H.M. Sprayregen, Jonathan S. Henes and Christopher T. Greco of Kirkland & Ellis in New York and Ryan B. Bennet of Kirkland & Ellis' Chicago office.
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