Major airlines don't file for bankruptcy very often. The last significant airline bankruptcy was Republic Airways Holdings' Chapter 11 filing in February 2016, and before that, American Airlines filed in 2011.
Smaller airlines have filed in the past couple of years, however, with Western Global Airlines filing Chapter 11 protection in August 2023 and Canada's Cascadia Air, Norway's Flyr and Mexico's Aeromar all filing for bankruptcy in 2023.
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More recently, Canada-based ultra low-cost airline Lynx Air on Feb. 22 obtained an initial order for creditor protection from the Court of King's Bench of Alberta under the Companies' Creditors Arrangement Act with plans to shut down all operations on Feb. 26 and wind down its business. The airline began air service on April 7, 2022 and flew nine Boeing 737 Max 8 aircraft to 18 destinations in Canada, U.S. and Mexico.
And now, the largest passenger charter and cargo airline in the U.S., iAero Airways, has shut down its operations, sold all of its assets and converted its Chapter 11 bankruptcy case to a Chapter 7 liquidation. The case is winding down but has not yet closed.
The charter airline on Sept. 19, 2023, filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the U.S. Bankruptcy Court for the Southern District of Florida listing $500 million to $1 billion in debt in its petition.
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The Miami-based company operated a fleet of 42 passenger and cargo aircraft, serving both domestic and international customers. The airline flew "unscheduled" flights with a diverse customer base with different and varying needs and demands, according to court papers.
Bankrupt iAero Airways, founded in 1997 as Swift Air, was acquired by iAero Group in 2019 and renamed iAero Airways. The charter airline served government, sports, entertainment, leisure and cargo market sectors. It operated flights for the U.S. Department of Homeland Security, National Hockey League clubs and shipping company DHL.
The company filed bankruptcy, according to a September declaration from interim CEO Kevin Nystrom, facing a number of challenges, including prior mismanagement by the debtor's former leadership, volatile cash flows caused by the Covid-19 pandemic, unprofitable agreements with Private Jet Services Group and an adverse arbitration judgment award of $29 million over a contract dispute with Private Jet Services.
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The company also had an unanticipated, recent temporary cessation of flight services for iAero's' largest customer account. The airline had difficulty securing new capital or refinancing its current debt obligations due to an overleveraged balance sheet with about $860 million in secured debt owed to Synovus Bank and Blackstone (BX) , of which $75 million owed to Synovus was to mature Dec. 31, 2023, the declaration said.
The debtor's objectives when it filed Chapter 11 was to deleverage its balance sheets, stabilize its businesses and reject burdensome contracts in a reorganization. It's restructuring would also include securing debtor-in-possession financing and a sale of certain assets. The debtor believed that significantly deleveraged balance sheets would allow it to attract new investors and raise new capital when it emerged from bankruptcy, according to the declaration.
The airline, however, was not able to successfully obtain adequate debtor-in-possession financing from its lenders or an alternative lender to reorganize the company and decided to cease operations on April 6, FreightWaves reported. The company had earlier obtained a $22.5 million DIP loan from its secured lender Synovus Bank when it filed Chapter 11 and an additional $5 million in March.
On April 8, iAero filed a motion for approval of an asset purchase agreement to sell its assets to Eastern Air Holdings for $71.2 million in take back debt from Synovus Bank, the debtor's prepetition secured lender and DIP lender. Judge Robert A. Mark signed an order on April 13 approving the sale, which closed on April 17.
The debtor filed a motion to convert its Chapter 11 case to Chapter 7 on April 30, which Mark approved on May 1.
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