Great Lakes in 'Hail-Mary' negotiations with newest lender

[FloridaLarry]

Great Lakes Airlines is again falling behind contractual financial benchmarks. As of June 30th, they are not in compliance with the covenant requirements of their financial loan package. Without going deeply into bean-speak, they are required to maintain a minimum level of certain assets, calculated by a formula that uses a rolling 12 month previous earnings average.

They have until August 28th to cure this problem. They do not expect to catch up by December 31st of this year. Without relief from these requirements from their lender, they will be in default and (a.) no more cash available in their lines of credit, and (b.) lender could foreclose on the assets (primarily the aircraft). So they need to reach new accomodations with the lender.

Now, they've been there before with previous lenders, and no lender wants to just pull the plug and gobble up the losses. This is happening as fuel costs are dramatically lower than in the immediate past.

Jan 1, 2015, 89 pilots; June 30th, 72 pilots with 6 in training.

Not lookin' good.

#s and facts from airline's 10-Q for 2nd Qtr 2015, filed within the week.

 

[Autothrust Blue]

SEEEEEEEEEEEEEEEEYUHHHHHHHHHHHHHHHHH!

 

[bimmerphile]

hey guys ive been told great lakes is a good place to build time and get sum experience just got my cfi ready to go to the big time plz respond

it'll be good to see this place gone.

 

[Autothrust Blue]

hey guys ive been told great lakes is a good place to build time and get sum experience just got my cfi ready to go to the big time plz respond

 

[Ajax]

A few weeks back I was asked by a friend to help talk to his student regarding GLA. He was a wet ticket CMEL and wanted to go there to get his hours. I told him about pay and ultimately the importance of QOL. If you have no QOL you come out of a job having fallen out of love with aviation. He didn't think it was too important because he'd only be there for a year or so before going to a major.

Well hell, if it's that easy I'll go to a major too

 

[bimmerphile]

A few weeks back I was asked by a friend to help talk to his student regarding GLA. He was a wet ticket CMEL and wanted to go there to get his hours. I told him about pay and ultimately the importance of QOL. If you have no QOL you come out of a job having fallen out of love with aviation. He didn't think it was too important because he'd only be there for a year or so before going to a major.

Well hell, if it's that easy I'll go to a major too

"all i need is just some pic time and then this guy from a messageboard @Derg will just walk my resume in to SouthernJets, no problem"

 

[hook_dupin]

My money is on Great Lakes lives.

I predict Chapter 11, a debt forgiveness for equity deal, and GLA going private.

 

[Ajax]

"all i need is just some pic time and then this guy from a messageboard @Derg will just walk my resume in to SouthernJets, no problem"

You forgot the cake

 

[gotWXdagain]

I've said this before. It is in no creditors interest to liquidate the assets. They will do whatever they can to extend the length, and work the interest as high as possible, such that any revenue going into the airline will go straight in to them. And they will do this while owning every last pencil and paperclip in that establishment. I wouldn't be surprised if they've already gained back the principle amount by this point.

 

[rockman2343@aol.com]

I'm rooting for them, I'm going to need a place to go when I go back to 121 flying.

 

[pete2800]

 

[FloridaLarry]

My money is on Great Lakes lives.

I predict Chapter 11, a debt forgiveness for equity deal, and GLA going private.

Based on their recent history, I'd have to agree with the Hookster. Any cockroach has fewer lives than this airline.

But there comes a time when there aren't any more (damn fool) lenders willing to take GLA on. Chapter 11 is likely, there may or may not be anyone ready to take them on as a debt-for-equity funder (essentially, they've had this. Again & again.) Fool me once,...

For success under a private funder, you have to have a business plan that will see success down the pike (Picture Judy Garland singing: "Somewhere, over the runway,..."). Their assets don't lend themselves to a successful re-birth. Except as a Barber College of Aviation. Gulf Stream of the Dust Bowl.

They've become a country & western song: "Whatcha gonna do when the well runs dry / I'm gonna sit right down and cry / Time's come & gone for GLA to fly / Sell the 1900s to a 3rd World Guy / Buy some caravans and one or two Pilati-i. / Stop cancelling and fly the schedule you'll say you'll fly.

I wish I could be hopeful. I'm not.

 

[Skåning]

hey guys ive been told great lakes is a good place to build time and get sum experience just got my cfi ready to go to the big time plz respond

 

[Screaming_Emu]

A few weeks back I was asked by a friend to help talk to his student regarding GLA. He was a wet ticket CMEL and wanted to go there to get his hours. I told him about pay and ultimately the importance of QOL. If you have no QOL you come out of a job having fallen out of love with aviation. He didn't think it was too important because he'd only be there for a year or so before going to a major.

Well hell, if it's that easy I'll go to a major too

Wait. You mean I could have left my regional 7 years ago? Why didn't anyone tell me this?

 

[bimmerphile]

Wait. You mean I could have left my regional 7 years ago? Why didn't anyone tell me this?

You never knew? It's clearly printed under the Box Tops for Education on every Betty Crocker box

 

[hook_dupin]

For success under a private funder, you have to have a business plan that will see success down the pike (Picture Judy Garland singing: "Somewhere, over the runway,...").

I'm convinced that the 121 and 135 certificates alone are worth a few mil.

My view is that GLA management continues to look for the leap-frogging debt deals as that's the best hope for them and the stock holders. Those Board of Directors meetings must be interesting....

 

[bimmerphile]

Those Board of Directors meetings must be interesting....

 

[Inverted]

I'm convinced that the 121 and 135 certificates alone are worth a few mil.

My view is that GLA management continues to look for the leap-frogging debt deals as that's the best hope for them and the stock holders. Those Board of Directors meetings must be interesting....

Worth a few mil? How? Why? Only if the EAS routes come along with it. Public interest in GLA is at an ever increasing low. The only thing bringing in revenue is money from the EAS routes. They have closes domiciles and gates everywhere not served by an EAS route to my knowledge. They are going to die unless they completely restructure, and that includes getting rid of this POS 1900s.

 

[ppragman]

Disregard, read incorrectly.

 

[hook_dupin]

Worth a few mil? How? Why? Only if the EAS routes come along with it. Public interest in GLA is at an ever increasing low. The only thing bringing in revenue is money from the EAS routes. They have closes domiciles and gates everywhere not served by an EAS route to my knowledge. They are going to die unless they completely restructure, and that includes getting rid of this POS 1900s.

Ever have the conversation "What do we need to do to get a 121/135 operations certificate?" It's better to buy than create. Heck, the market cap is only $6M.

I believe that the combination of an improving economy and a federal government that's absolutely log-jammed makes existing certificates highly prized.

My view: you'll see Great Lakes Airlines d/b/a New Name Air. The stock holders will be wiped out, debt will be restructured, and old management will be shown the door.