Avantair seeks fresh financing after ceasing operations

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US fractional ownership company Avantair has suspended operations following a cash crisis. The Piaggio Avanti operator says it is seeking additional investment to resume flying but is now facing a number of court battles from aggrieved customers and employees.

Avantair has about 500 staff and operated from Clearwater International airport, Florida. In a filing with the US Securities and Exchange Commission in late June, the 10-year-old company also said it has fallen behind on lease payments for some of its Avantis and is in danger of having a number of the twin-engined turboprops and engines repossessed.

avantair piaggio p180 avanti ii avantair

 Avantair 

Avantair is the largest operator of the twin-turboprop Piaggio

Avantair's 56-strong Avanti fleet has been grounded since 6 June following anonymous allegations it was not adequately tracking time-sensitive parts on its fleet and providing detailed inspections to ensure compliance with US Federal Aviation Administration regulations. The fleet was previously grounded for three weeks in October 2012 following an incident in which an elevator separated from the tail of an aircraft in Camarillo, California.

Avantair now faces lawsuits from customers, with one stating the first grounding should have been disclosed when it was buying a share in the programme. Former employees are also suing the company for failing to pay wages since 8 June and furloughing them without giving 60-days notice.

Avantair executives could not be reached for comment, but in a letter to customers dated 28 June, Avantair president Dave Haslett said: "Over the past few months, we encountered issues that drained the company's working capital, and it became impossible to recover without reassessing our capital structure and business model.

"As our service was impacted and we were forced to temporarily ground our fleet, charter costs sky-rocketed and our accounts receivable grew as it became increasingly difficult to collect on outstanding amounts due." He adds that the scenario is unsustainable and Avantair must restructure "to emerge healthy and able to resume profitable operations". He also says the company plans to "revise its pricing".

"We are in discussions with some of our vendors, lenders and other third parties to obtain the working capital needed to restructure and fund operations," it adds.

Piaggio is says it is "concerned to learn of Avantair's operational issues", as the fractional firm is the largest operator of Avantis. However, Avantair says the manufacturer has pledegd its support.

Avantair made a loss of $10.5 million in the nine months to 31 March 2013.