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Cargo airline eyes new bankruptcy

For the second time in two years, Global Aviation Holdings has filed a petition for protection from its creditors. The provider of passenger, cargo and military charter services in Florida and around the world announced its intention to once again declare Chapter 11 bankruptcy due to the U.S. military cutting back on shipping that is a large part of the company's revenues. Global Aviation is the biggest single provider of chartered air services to the Pentagon. In addition to the reduction in military contracts, a downturn in commercial freight shipping was also cited as a reason for the bankruptcy.

A spokesman for the company said that Global Aviation planned to use the reorganizing process to lower costs, grow revenue and diversify its product offerings. Some 200 people could be trimmed from the company's 1,200-person workforce due to Global Aviation's stated intention to cut personnel by 16 percent in the 90 days following the announcement.

More than 30 planes carrying passengers and cargo are operated by the two airlines owned by Global Aviation. World Airways and North American Airlines fly the fleet that includes McDonnell Douglas MD-11s as well as Boeing 747s and 767s. The company said that it has asked the bankruptcy court to permit it to continue to pay workers' wages and to provide their health care benefits.

The company is relying on loans from existing secured creditors to help it through its reorganization and restructuring process in accordance with the plan that must be approved by the Delaware bankruptcy court. The nature of these loans that are made in Chapter 11 proceedings usually give the lenders priority over other claimants.

Source: International Business Times, "Global Aviation Holdings, Top Charter Air Service For US Military, Seeks Chapter 11 Bankruptcy Protection For Second Time In Two Years", Joseph Adinolfi, November 11, 2013

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