Great Lakes 135 approval

Their business model has been under attack from both smaller (Cape Air & others) and larger (Eagle, SkyWest & others) regional carriers. Their spot in the middle has been shrinking. The 1,500 hour requirement has been catastrophic, compounded by FAA delay after delay in getting the 9 Pax system up and running. Too little, too late, I fear.

EAS is not the problem It has been a part of their life-support, delaying needed change.

Good employees will be hurt. Someone should be printing T-shirts for the inevitable: "I'm still in aviation. Great Lakes is not."

What is running is time. Out.

Too bad for the troops still there.
 
Blaming the 117 rules and the 1500hr rule is a lame excuse. They knew WAY in advance that these rules were coming, and could have acted. Sell the 1900 fleet off, switch to a lower operating cost airframe, go Part 135 full bore, start running a business that people want to work for and fly for, and at least look SOMEWHAT appealing to some new investors. Keeping half-full 1900's doesn't stop the bleeding.
 
NewYorkophile said:
Blaming the 117 rules and the 1500hr rule is a lame excuse. They knew WAY in advance that these rules were coming, and could have acted. Sell the 1900 fleet off, switch to a lower operating cost airframe, go Part 135 full bore, start running a business that people want to work for and fly for, and at least look SOMEWHAT appealing to some new investors. Keeping half-full 1900's doesn't stop the bleeding.
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Yup.
 
FloridaLarry said:
NewYorkophile said (in part):


It's finance-speak, not bull. Their financing (read: mortgage) requires certain financial benchmarks be maintained. Like your mortgage requires you to keep a roof on your house, and insurance in force. For a combination of reasons - pilot desertions, inability to hire at their pay scales, inability by now to raise their pay scales - they've been in a declining spin that has taken them below (financial) minimums.

They now have to convince their lenders to avoid foreclosing, and/or find some more / replacement financing. To be successful, they have to convince financial bean-counters that their beans will be safe and profitable invested in GLA.

Big challenge!
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That's the big problem- no one with any financial wherewithal whatsoever would even think about investing here.
 
exneophyte said:
You too can own a share of aviation history for the low low price of $.80!
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Right now, that stock (if I owned any) would be worth more than the 100 shares in pre-bankruptcy Mesa that I did own.

Not for long, I fear.
 
NewYorkophile said:
Blaming the 117 rules and the 1500hr rule is a lame excuse. They knew WAY in advance that these rules were coming, and could have acted. Sell the 1900 fleet off, switch to a lower operating cost airframe, go Part 135 full bore, start running a business that people want to work for and fly for, and at least look SOMEWHAT appealing to some new investors. Keeping half-full 1900's doesn't stop the bleeding.
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This is doubly lame because pilot staffing and publishing the 10K are two separate acts completely. Management knows how bad the news is... they just don't want to further make the creditors freak out. I think it's not that they're over their leverage limits... It's that they've gone so far over the leverage limits that there's no going back.

Likely, GL is short on cash and nobody really wants clapped-out B-1900s.
 
hook_dupin said:
This is doubly lame because pilot staffing and publishing the 10K are two separate acts completely. Management knows how bad the news is... they just don't want to further make the creditors freak out. I think it's not that they're over their leverage limits... It's that they've gone so far over the leverage limits that there's no going back.

Likely, GL is short on cash and nobody really wants clapped-out B-1900s.
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I'm sure some freight operator would take them for pennies on the dollar.
 
z987k said:
I'm sure some freight operator would take them for pennies on the dollar.
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I should have said "Nobody wants their B-1900s at or near market value."

One solution is for GL to get smaller by selling off assets and really focusing on the profitable routes. They can't unload the costs of their extra assets to help with their cash problem.

This ends in GL running out of cash and not being able to secure further financing.
 
hook dupin said (in part):
...One solution is for GL to get smaller by selling off assets and really focusing on the profitable routes. They can't unload the costs of their extra assets to help with their cash problem....
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Hook is right. They've been doing the first part, perhaps not so intentionally. I'm sure their financial contracts require any asset sales to first be paid to the lender, just like your house sale first pays off the mortgage. With no huge market at premium prices for older 1900Ds, the amount of free cash that such sales might throw off probably isn't large. If any.

Their only hope is financing, or re-financing with the existing lenders, with a business plan that has a hope of succeeding.

They're trying to climb with a single engine. With gear that won't retract. Flaps that disagree. While leaking fuel. Badly.
 
Effective April 1, 2014, Great Lakes Aviation, Ltd. (the "Company") entered into the Third Amendment and Forbearance to Credit Agreement (the "Forbearance Agreement") with its lenders Crystal Financial LLC and GB Merchant Partners, LLC (the "Lenders").

As of April 1, 2014 the Company was in breach of or expected to be in breach of three financial covenants under its Credit Agreement dated as of November 16, 2011 (the "Credit Agreement"). Pursuant to the Forbearance Agreement, the Lenders have agreed to temporarily forbear from exercising certain rights and remedies under the Credit Agreement. The Company has agreed, until the Forbearance Termination Date, to pay the Lenders an additional two percentage points per annum above the rates of interest otherwise applicable under the Credit Agreement. The Company also agreed to retain a consultant to produce a financial report for the Lenders, to provide cash flow projections to the Lenders, and to reimburse the Lenders' costs incurred in connection with the Forbearance Agreement.

The Forbearance Termination Date is on the earliest of (i) April 30, 2014 and
(ii) the date on which Great Lakes commits additional breaches under the Credit Agreement.



I dug a little.. GL is now getting financed at roughly 13.5% (11% + 2% + LIBOR)... that's insanely high in the commercial credit world.
 
bankruptcy.jpg
 
They bought time. Expensive time, and not a lot of it. Look around for a rabbit and a hat.

Chapter 11 actually buys cheaper time, unless their lenders have clauses about that which are more puniative.

Their lawyers are calling their boat dealers - Shiny Jet-boat Syndrome.
 
Bandit_Driver said:
Unless some investor dumps more money in to them.
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Well, I guess anything is possible these days... People seem to be getting completely stupid with investments again.

Unless a pilot has absolutely nothing to lose, I really don't think it would be wise to leave any job short of a crappy CFI gig for this place. Even then, I really doubt there are many PIC qualified people in that position.
 
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Bandit_Driver said:
Unless some investor dumps more money in to them.
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Not gonna happen. There is nothing in it for investors to see a return. Even with the 135 change, I cannot imagine that future projections are exciting on paper. Not to mention, this isn't a company that is good, has good intentions, and is struggling. This is a crooked, bottom-feeding, crappy airline with a management team that has done nothing but decrease profits, decrease public approval, and decrease future profitability of the company. If GLA owned it's aircraft outright, the only thing worth investing in, would be to buy the company cheap, and liquidate the assets.
 
Patrick said:
Yup. There's no way they're ever going to emerge from this.
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I think GL will emerge out the back-side. The banks are going to get a company with $77M in assets for only about $22M. The company will go into Chapter 11, the creditors will propose a debt-equity swap, the management team will all be fired, the current stock holders will see their investments evaporate, and a bunch of pilots will be laid off.

The new owners will sell off a bunch of assets and make the company be one with a $20-$30M asset base that is profitable vice a $77M company that's debt-loaded.

I owe the JC community a how-to video on how to walk through a financial statement. Pro pilots need to be able to determine the financial health of their respective companies.
 
hook dupin said:
I think GL will emerge out the back-side....
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Possible, but a steep climb with one engine out and the other providing half its rated thrust.. Assets? The entire fleet is owned by GLA but pledged as security for the huge loans (and at high interest rates) from their financiers. I doubt if selling it all off even could (a.) happen quickly, and (b.) provide adequate return for the bankers. At this point, could they get new financing with an even higher interest rate - maybe. Succeed? I doubt it.

The miracle worker who could pull this one off hasn't yet shown his/her head. Either in the biz, or from Momma's womb!

I doubt if many would consider GLA's 'Good Will' as much of an asset. The certificate is worth something, the remaining staff who haven't run screaming to a-n-y-where else have some capabilities, but would require re-training to a new business model with Caravans / Pilatii, etc. The syllabus would require a course in 'clock' to get things running on schedule, and a course in 'truth' to re-build the shreds of reputation. New name: maybe Endeavor? Silver? Envoy? Most apt: Phoenix, but that one could be confusing. :confused:

IMHO, there just aren't enough assets for GLA II to rise from these ashes. I'd be glad to be proven wrong.

My bet is that the few operators who do know how to run this kind of railroad (Cape Air comes to mind first, but there are a few others) will ramp up to take over the lower & middle EAS routes, while other operators with CRJ-200s staring at idleness will continue to cherry-pick those few routes that could possibly grow and/or be profitable for their SJSs - uhh, NSSBINPJS (Not-So-Shiny-But-In-New-Paint Jet Syndrome). Already happening with Eagle - uhhh - Envoy and Skywest.

Hook, I'm eager to see your video on walking through a financial statement. Obviously, we've both been through the GLA materials with hip-waders on. We're coming out of the cloud at slightly different altitudes and GPS fixes, but both turning final in sequence, and trying to avoid wake turbulence.
 
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