Global Aviation Holdings has filed for Chapter 11 bankruptcy, citing its large fleet and high labour costs.
"Although the company has worked closely with its lessors, bondholders and other creditors and constituents over the past year, which led to the reduction of certain obligations, the company needs to complete its comprehensive restructuring due to having too large a fleet, labour costs that exceed industry standards given the current global economic environment, and the necessity to align the capital structure with the size of the company," Robert Binns, chairman and CEO of Global Aviation said in a statement.
The filing was made in the US District Court for the Eastern District of New York, and requires court approval to be implemented. Global Aviation is the parent company of World Airways and North American Airlines, the largest providers of military transport services to the US armed forces. It also provides charter services.
"The company's board of directors determined that a Chapter 11 reorganisation provides the most effective and efficient means to restructure with minimal impact on the business, and is in the best interest of the company, its stakeholders and customers," said the company.
It added that its units will continue normal operations without service interruption. This includes honouring customer contracts, providing employee compensation and other benefits, and paying vendors for services and goods provided following the petition for Chapter 11. Vendors who issued invoices before the Chapter 11 filing who have not been paid will see their cases "resolved through the company's plan of reorganisation".
"We are committed to working as quickly and efficiently as possible to appropriately restructure Global so that it can emerge from Chapter 11 as a strong company, well-positioned to compete effectively in the marketplace," added Binns.
According to Flightglobal's ACAS database, World Airways operates 16 aircraft: two Boeing 747-400s and 14 McDonnell Douglas MD-11s. North American Airlines operates 10 aircraft: five 757-200s and five 767-300ERS.
Source: Air Transport Intelligence news