Brazilian airline GOL files for Chapter 11

BY Fraser Tennant

In a move that reflects the lingering challenges Latin American airlines face from the coronavirus (COVID-19) pandemic era, Brazilian low-cost carrier GOL filed for Chapter 11 bankruptcy.  

The company intends to use the Chapter 11 process to restructure its short-term financial obligations and strengthen its capital structure for long-term sustainability.

GOL’s Chapter 11 filing makes it the latest Latin American carrier to seek bankruptcy protection after the global pandemic, following sister company Avianca, Mexico's Aeromexico and Chile-based LATAM Airlines.

Despite challenges to its capital structure and lower aircraft availability, GOL’s operational performance remains strong. In the third quarter of 2023, the company delivered one of the best operating results for airlines in Latin America, and the fourth consecutive quarter of high and consistent operating margins.

The airline has stated that its business will continue as normal during the oversight process conducted by the US court and the company will honour commitments to business partners and suppliers for the goods and services provided on or after the date of the Chapter 11 filing.

“GOL has been making significant efforts to offer the best travel experience to customers, while improving its profitability and financial position,” said Celso Ferrer, chief executive of GOL. “We have made notable progress so far and we believe that this process will allow us to address the challenges generated by the pandemic, while maintaining the high standard of services we offer to customers.”

The company expects to emerge from the Chapter 11 process with a significant capital investment, including the new $950m in debtor in possession (DIP) financing, giving it the opportunity to expand its position as a leading airline in Latin America.

“With the support of the court-supervised process and the additional liquidity of DIP financing, our passenger and cargo flights, the Smiles loyalty programme and other company operations continue normally,” continued Mr Ferrer. “GOL will continue to offer safe, reliable and low-cost air travel services, providing the best experience to customers, who will be able to organize their trips in the way they always have.”

One of the leading airlines in Brazil and part of the Abra Group, since its founding in 2001 GOL has been the company with the lowest unit cost in Latin America, which has enabled the democratisation of air transport.

Mr Ferrer concluded: “We are confident that the measures being taken will allow GOL to continue offering lower fares with exceptional travel experiences to Customers on an increasing number of routes, including improving accessibility, the travel experience and customer choice.”

News: Heavily indebted Brazilian airline Gol files for bankruptcy in US

Air Methods emerges from bankruptcy protection

BY Richard Summerfield

Private equity-owned medical helicopter company Air Methods has successfully emerged from Chapter 11 bankruptcy protection with significantly reduced debt and increased liquidity.

The company, headquartered in Englewood, Colorado, was acquired by private equity firm American Securities in 2017. It filed for bankruptcy in late October 2023 with around $2.24bn in debt. Air Methods’ creditors were demanding around $1.3bn in payments, of which the company could only cover around 15 percent.

“Today marks an important inflection point for Air Methods in our transformation journey as we enter our next stage focused on investing in the business and executing on our growth initiatives for the benefit of our healthcare partners, communities, customers, and patients,” said JaeLynn Williams, chief executive of Air Methods. “With a stronger balance sheet and additional financial resources, we remain focused on serving our contractual partners, opening new greenfield bases, optimizing our field operations, expanding our frontline team, and going in-network with commercial insurers. We are well-positioned for long-term success and excited about the opportunities ahead.”

As part of the restructuring process, ownership of the business transitioned to the company’s lenders and noteholders upon emergence, as contemplated by the pre-packaged plan of reorganisation. Some of the new owners are investing approximately $185m of new capital. Air Methods will continue to provide services through its fleet of 365 medical helicopters and fixed-wing aircraft, operating from 275 bases and serving 47 states across the US.

The company aimed to complete its debt restructuring by the end of 2023, according to its court filings, and announced the successful completion its financial restructuring on 28 December. The restructuring saw the company cut around $1.7bn of its debt. In its filing, the company said its business had suffered due to high operating costs, rising interest rates and the enforcement of the US No Surprises Act, which banned surprise bills for out-of-network medical care and made it more difficult for the company to collect payment for services rendered.

Founded in 1980 to provide air transport for patients and urgent supplies, Air Methods’ troubles began after it was taken private by American Securities. Its finances were first sapped by having to increase salaries to attract and keep skilled employees.

News: Air Methods exits bankruptcy with $1.7 billion less debt

Western Global Airlines exits Chapter 11

BY Fraser Tennant   

Having struggled under a heavy debt load and weak market conditions, US cargo airline Western Global Airlines has exited the Chapter 11 bankruptcy process following the completion of a comprehensive financial restructuring plan.

Under the plan, the carrier has reduced its debt by more than $460m and infused significant new capital into the company, while preserving its workforce and long-term relationships with customers and suppliers.

The company, which operates chartered cargo jets for the US military and other customers, filed for Chapter 11 in August 2023, stating that it would restructure with the help of $77m in financing from creditors.

Over the course of 100 days, the company restructured its debt through an in-court process while continuing to operate without disruption. The restructuring included a cash award retention programme for nearly its entire workforce that drew upon $77.5m of debtor in possession (DIP) financing provided by its owners, Jim and Sunny Neff.

The owners also funded equity and exit financing, and waived nearly $100m of secured and unsecured prepetition debt held by them in order to provide recovery to all creditors.

"My top priority has always been to preserve the long-term viability of our company and protect our people,” said Jim Neff, founder and chief executive of Western Global Airlines. “I am pleased our restructuring process has achieved that. It continues to be a privilege to lead our team, especially as Western Global Airlines has emerged stronger and ready to thrive again as it has historically done.”

Headquartered in Estero, Florida, in only 10 years Western Global Airlines has become a leading, global logistics powerhouse, safely and reliably flying to over 400 airports in 135 countries on six continents on behalf of its diverse, blue chip client base in the logistics industry.

“As always, I am immensely grateful to our employees, customers and partners for their enduring support as we navigated the Chapter 11 process,” concluded Mr Neff. “I look forward to sharing the company's successes with our loyal employees and to continue to serve as a critical partner for our customers.”

News: US's Western Global Airlines exits Chapter 11

WeWork files for Chapter 11

By Fraser Tennant

In a major collapse for an organisation once valued at $47bn, office-sharing company WeWork Inc. has filed for Chapter 11 bankruptcy in order to strengthen its balance sheet and streamline its real estate footprint.

The Chapter 11 process allows WeWork to implement a restructuring support agreement (RSA) with holders representing approximately 92 percent of its secured notes to drastically reduce the company’s existing funded debt and expedite the restructuring process.

The filing, which is limited to WeWork’s locations in the US and Canada, lists the company’s total debts as $18.65bn against total assets of $15.06bn. As part of the filing, the company has requested the ability to reject the leases of certain locations, which are largely non-operational, and all affected members have received advanced notice.

“Now is the time for us to pull the future forward by aggressively addressing our legacy leases and dramatically improving our balance sheet,” said David Tolley, chief executive of WeWork. “We defined a new category of working, and these steps will enable us to remain the global leader in flexible work.”

During the RSA process, the company has pledged to further rationalise its commercial office lease portfolio while focusing on business continuity and delivering best-in-class services to its members. Global operations are expected to continue as normal.

“I am deeply grateful for the support of our financial stakeholders as we work together to strengthen our capital structure and expedite this process through the RSA,” continued Mr Tolley. “We remain committed to investing in our products, services, and world-class team of employees to support our community.”

Founded in 2010, WeWork’s vision was to create environments where people and companies come together and do their best work. Since then, the company became the leading global flexible space provider committed to delivering technology-driven turnkey solutions, flexible spaces and community experiences.

“It is the WeWork community that makes us successful,” concluded Mr Tolley. “Our more than half-million members around the world turn to us for the best-in-class spaces, hospitality and technology that our 2500 dedicated employees and valued partners provide. WeWork has a strong foundation, a dynamic business and a bright future.”

News: SoftBank's WeWork, once most valuable US startup, succumbs to bankruptcy

Air Methods files for Chapter 11

BY Fraser Tennant

In a move intended to restructure its business operations and reduce its total debt, private equity-owned air medical helicopter company Air Methods and certain of its affiliates has filed for Chapter 11 bankruptcy protection.

The Chapter 11 filing allows the company to implement a restructuring support agreement (RSA) with its first lien lenders (including commitments for $80m of debtor-in-possession (DIP) financing), bondholders and its equity sponsor under which such key stakeholders have agreed to support an expedited balance sheet restructuring.

Additionally, the restructuring contemplated by the RSA – which aims to reduce the company’s total debt by approximately $1.7bn – provides for vendors and suppliers to be paid in full, and for teammates to continue receiving their pay and benefits without interruption.

As it moves through the court-supervised process, Air Methods is operating normally and without service interruptions, continuing to serve partner hospitals, healthcare systems and customers.

“We are pleased to have reached this agreement with our key stakeholders, which will enable us to continue supporting patients with lifesaving care and serving as an integral link between the nation’s top healthcare facilities and people in rural and remote communities,” said JaeLynn Williams, chief executive of Air Methods. “Over the past year, we have made meaningful progress optimising our field operations, going in-network with leading commercial insurers and improving our cost structure.”

“We have also seen record numbers of transports, and we have opened several new bases across the country this year as there is a great demand for air medical services. By strengthening our balance sheet, we are taking an important step forward in delivering on our transformation plan while answering every call with the highest level of service and patient care.”

With more than 40 years of air medical experience, Air Methods is the preferred partner for hospitals and one of the US’ largest community-based providers of air medical services. The company’s fleet of owned, leased and maintained aircraft includes approximately 390 helicopters and fixed-wing aircraft.

Air Methods expects to complete the restructuring process on an expedited basis and emerge from Chapter 11 with an optimal capital structure by the end of the year.  

Ms Williams concluded: “With increased financial flexibility and access to additional capital, we will be better positioned to continue opening new greenfield bases, accelerate our talent acquisition initiatives, execute on our growth initiatives and equip more emergency personnel with the expertise needed to safely deliver the highest quality air medical care for generations to come.”

News: Medical helicopter company Air Methods files for bankruptcy