iAero Group files for Chapter 11 bankruptcy

December 2023 | DEALFRONT | BANKRUPTCY & CORPORATE RESTRUCTURING

Financier Worldwide Magazine

December 2023 Issue

In a move designed to reorganise its operations and pave the way for a return to profitability, iAero Group and a number of its subsidiaries including iAero Airways (the largest B2B passenger charter and cargo air carrier in the US) filed for voluntary Chapter 11 bankruptcy protection.

Additional subsidiaries in the group affected by the Chapter 11 filing include iAero Group Holdco 6 LLC, iAero Group Parent LLC, iAero Group Intermediate Inc, Swift Air Travel, LLC, iAero Thrust LLC, JAM Aerospace Parts, LLC, and iAero Group Bidco Inc., among others.

According to the bankruptcy court’s filing, the company has up to 49 creditors and estimated liabilities of between $500,000 and $1m. iAero Group claims assets of less than $50,000.

As part of the reorganisation, the company has the support of its senior secured lenders in the form of an approved restructuring support agreement and a commitment for a senior secured super-priority delayed draw debtor-in-possession (DIP) financing credit facility in an aggregate amount of up to $22.5m.

The company has stated that the restructuring support and DIP financing will allow it to maintain normal operations throughout the process, including continuing all customer flights as scheduled, without significant disruption and ensure the company’s long-term viability.

“After careful consideration, our board determined it was necessary to take this step now to address our financial strength and restructure certain of our contractual relationships and legacy balance sheet liabilities,” said Timothy Rainey, president of iAero Airways. “We believe this Chapter 11 filing provides the most effective means to restructure with minimal impact on the business.”

Founded in 2019 through the acquisition of Swift Air – a well-established airline that had been operating since 1997 – iAero Airways provides charter services, aircraft, crew, maintenance and insurance (ACMI) leasing and cargo flights for global courier companies.

According to the ch-aviation fleets advanced module, the Greensboro, North Carolina and Miami-based airline operates 44 aircraft including eight B737-300s, one B737-300(F), 18 B737-400s, two B737-400(SF)s, five B737-800s, four B737-800(SF)s, five BDSFs and one B767-300ER.

Moreover, while the majority of airlines have transitioned to 737NG and 737 MAX aircraft, the iAero Group is one of the few American companies that still operates the Boeing 737 Classic family – a mainstay of historical aviation in the US. Although the fleet is rarely available for the public to travel on, they are still visible to the public at commercial airports around the country.

“Our customers and we are committed to moving through this process as expeditiously as possible so the company can emerge from Chapter 11 well-positioned to maximise our long-term prospects for the benefit of our customers, employees and other stakeholders,” added Mr Rainey.

Supporting the iAero Group throughout the Chapter 11 process is King & Spalding LLP and Berger Singerman LLP as legal counsel, Jefferies LLC as investment bankers and Alix Partners which will provide interim management services.

Mr Rainey concluded: “The company is optimistic about its long-term future upon emergence as it stabilises its businesses following a global pandemic that placed unprecedented pressures on the airline industry and significantly deleverages its balance sheet during these Chapter 11 cases.”

Fraser Tennant