Embattled operator CHC Helicopter, already reeling after one of its aircraft was involved in a fatal accident on 29 April, has filed for Chapter 11 bankruptcy protection.
Day-to-day operations are anticipated to continue as normal during the restructuring process, it says.
Karl Fessenden, chief executive at CHC, says the Chapter 11 process gives the company “an orderly path to enhance our financial flexibility and establish a competitive capital and operating structure” to grow the business in the long term.
The filing comes as little surprise. CHC was struggling under the weight of accumulated debt even before to the crisis afflicting the oil and gas industry, which led to “decreased customer demand and idle aircraft”, it says.
The company had been making efforts to divest aircraft and cancel leases, but it appears to have run into opposition from its suppliers.
On 15 April, CHC declined to make an interest payment of $46 million to holders of a particular set of bonds in the company, triggering a 30-day grace period before it was technically in default.
However, it said that a default would allow the bond holders to accelerate repayments, including the principal sum of more than $1 billion.
As at 31 January, long-term debts stood at $1.4 billion, plus an additional $1.4 billion of lease commitments and $236 million in aircraft purchase commitments.
CHC's most recent quarterly accounts, for the period ended 31 January 2016, show its fleet consisting of 231 helicopters, the majority of which are heavies.
These are dominated by variants of the Airbus Helicopters Super Puma – either the H225 or AS332 – with a total of 75 in operation, along with 46 examples of the Sikorsky S-92.
CHC additionally operates 110 medium-class rotorcraft: 43 AgustaWestland AW139s, 50 S-76s across three variants, and a handful of Bell Helicopter 412s and other Airbus Helicopters models.
A key part of the restructuring will be to “facilitate its financial and fleet reorganisation”, says the company.
“We have built an operational plan that clearly identifies which aircraft are required for customer operations (primary and backup aircraft) and those that are not required,” it adds.
Some 43 of the company’s subsidiaries are included in the Chapter 11 filing, although its operating business in the UK – CHC Scotia – is not among them. However, no further details were immediately available. It also owns maintenance provider Heli-One.
CHC says it is “evaluating each of our legal entities to determine how they can be sustainable and competitive in the long term”.
Although the company had already been attempting to cut headcount across its businesses, it warns that more redundancies may be required as it looks to “further reduce our costs, including our direct labour costs”.
It provides no timeline for the completion of Chapter 11 restructuring.