Great Lakes to rise from the ashes?

[crazyjaydawg]

I think why the lenders keep giving them money is because it's like a loan shark situation. I'm sure most of these lenders have made close to their money back in the absurd interest and fees that they've collected. Also if/when GLA goes tots up, the lenders have first crack on what assets remain, the most valuable being the certificate.

 

[Burrito]

Republic to begin flying Beechcraft 1900s, perhaps. . . ?

 

[SeanD]

Republic to begin flying Beechcraft 1900s, perhaps. . . ?

No way. They are getting rid of their Qs. RAH will likely have an entire E175 fleet within a year. What crazydawg said makes sense. The certificate is worth something to someone.

 

[Vyse]

IIRC from my student loans, a "forebearance" just means "yeah we can't pay right now, we need to delay payments for a few more months"

The planes have no value, but as a previous poster mentioned, the cert, EAS contracts, and the pilots might. This might just be to buy time to find a buyer.

 

[Burrito]

IIRC from my student loans, a "forebearance" just means "yeah we can't pay right now, we need to delay payments for a few more months"

The planes have no value, but as a previous poster mentioned, the cert, EAS contracts, and the pilots might. This might just be to buy time to find a buyer.

If they're indeed still doing the EAS routes that (Delta?) had, maybe PenAir could come in with some more Saabs? It's worked in New England where they picked up Colgan's slack.

 

[SeanD]

IIRC from my student loans, a "forebearance" just means "yeah we can't pay right now, we need to delay payments for a few more months"

The planes have no value, but as a previous poster mentioned, the cert, EAS contracts, and the pilots might. This might just be to buy time to find a buyer.

A buyer willing to pay those folks more. Anything less is a waste of time and just prolonging whats inevitable.

 

[Plata]

It all seems a bit on the sketchy side to me.

It's very common for private money to not be identified in small financing arrangements such as this. Not sketchy in the slightest.

With public companies you can get a lot of info on lenders and white knights from SEC filings. With privately and closely held companies it's much harder to get factual info.

 

[hook_dupin]

With public companies you can get a lot of info on lenders and white knights from SEC filings. With privately and closely held companies it's much harder to get factual info.

If I were consulting for GL or an entity looking to fix GL, I would take the company private just to stop doing the ass-pain that is SEC reporting. There's only about $5M in equity out there.

 

[FloridaLarry]

GLA is a public company, subject to SEC reporting requirements (else we'd have no information until something happens that they are willing to talk about publically). Doug Voss, their chairman, owns the majority interest, and I'd be willing to bet that their stock isn't held by a lot of major investor funds. Unless they needed the losses come tax time.

crazyjaydog said:

I think why the lenders keep giving them money is because it's like a loan shark situation. I'm sure most of these lenders have made close to their money back in the absurd interest and fees that they've collected. Also if/when GLA goes tots up, the lenders have first crack on what assets remain, the most valuable being the certificate.

Lotta truth here. Their lenders are specialists in risky businesses, some of which will turn around and some of which will auger in. Bottom line, they make money, and know how to minimize their losses before a company kisses a mountain side.

hook-dupin said:

If I were consulting for GL or an entity looking to fix GL, I would take the company private just to stop doing the ass-pain that is SEC reporting. There's only about $5M in equity out there.

I agree with Mr. Dupin, but not for the reason he suggests. A purchaser of the company, if s/he doesn't just want to go Chapter 7 and sell off the assets (You're right: GLA's assets do not lend themselves to this scenario!) might well take the company private, fix it, and then take it public again while wracking up the capital gains. Any purchaser, or a public tender offer, will look at the verifiable (and audited) facts. Only the public looks at the reputation, and GLA has done enough damage on their own here.

They've bought a very short amount of time. This is either a Hail-Mary pass or a deal in the making. My bet is on the latter.

 

[gotWXdagain]

Not sure how true this is but a guy I used to work with used to be a pilot at Lakes, told me that the owner of Lakes also owned alot of the supply chain that Lakes pays money to in order to operate, down to the paper company that supplies reams of office paper. Those companies would then be able to charge Lakes as much as they wanted for supplies, and Lakes takes in all the government money in order to afford the "supplies."

That's from the "Not sure if true but wouldn't surprise me at all if it was" file.

 

[FloridaLarry]

gotWXdagain said:

Not sure how true this is but a guy I used to work with used to be a pilot at Lakes, told me that the owner of Lakes also owned a lot of the supply chain that Lakes pays money to in order to operate, down to the paper company that supplies reams of office paper. Those companies would then be able to charge Lakes as much as they wanted for supplies, and Lakes takes in all the government money in order to afford the "supplies."
That's from the "Not sure if true but wouldn't surprise me at all if it was" file.

While I can't speak to the accuracy of WX's friend, Doug Voss does lease two 6 pax planes and one car to GLA, and has for years. This from their SEC filings.

 

[surreal1221]

Wonderful news would be GLA filing for Chapter 7 and ceasing to exist.

You're clearly not up to speed on my #sarcasm, much less my overall distaste for Great Lakes.

 

[Apophis]

You're clearly not up to speed on my #sarcasm, much less my overall distaste for Great Lakes.

I am, and knew you were joking. But my distaste for GLA is equally strong, thus the response.

 

[hook_dupin]

might well take the company private, fix it, and then take it public again while wracking up the capital gains. Any purchaser, or a public tender offer, will look at the verifiable (and audited) facts. Only the public looks at the reputation, and GLA has done enough damage on their own here.

I say take it private and leave it private. I think a team will "fix" GLA then sell it to a bigger holding company vice trying to publicly issue. The new stock would be risky because of both size and sector. I can't think of a similar sized airline operation that is publicly traded.

 

[hook_dupin]

I saw GLA's monthly passenger numbers today:

http://finance.yahoo.com/news/great-lakes-aviation-ltd-reports-100000098.html

It's no shocker that they flew less pax than a year ago. On the good side, revenue for available seat-mile (RASM) and load factor (percentage of seats sold) have both gone up. The airline is getting more efficient. Is it enough?

 

[jwp_145]

Not sure how true this is but a guy I used to work with used to be a pilot at Lakes, told me that the owner of Lakes also owned alot of the supply chain that Lakes pays money to in order to operate, down to the paper company that supplies reams of office paper. Those companies would then be able to charge Lakes as much as they wanted for supplies, and Lakes takes in all the government money in order to afford the "supplies."

That's from the "Not sure if true but wouldn't surprise me at all if it was" file.

I have heard that too... I know-ish his nephew (who is a spray pilot) and it didn't come up when I talked to him about Doug's company.

 

[🦈💜]

... On the good side, revenue for available seat-mile (RASM) and load factor (percentage of seats sold) have both gone up. The airline is getting more efficient. Is it enough?

Um... would pulling half the seats out of their 1900s have affected those numbers?

Just curious.

-Fox

 

[hook_dupin]

Um... would pulling half the seats out of their 1900s have affected those numbers?

Just curious.

-Fox

Yes on the revenue and pax raw numbers, but not on the financial efficiency numbers. Their available seat miles dropped by nearly two thirds between last year and this year because of what you said... removing seats and chasing the 135 certificate. The revenue they were able to extract from those seats (RASM) went up, which is a glimmer of hope (perspective-dependent, of course).

 

[wheelsup]

If they removed 2/3 of their seats their revenue would have to increase by that amount in order to remain constant, my guess is it did not. In other words, while the metrics look better they probably aren't so hot.

 

[hook_dupin]

If they removed 2/3 of their seats their revenue would have to increase by that amount in order to remain constant, my guess is it did not. In other words, while the metrics look better they probably aren't so hot.

For RASM to be constant with removing 2/3 capacity, revenue would have to decrease by 2/3. That didn't happen. Revenue dropped, but not as much as the capacity that was cut.

I'm with you, though... There's probably more to the story. You'd like to see an airline in a turn-around cut capacity by killing the bleeding routes vice doing this 9-seat trick. Why even bother having a press release stating pax info unless there's an underlying message? No other airline bothers their PR and marketing folks with the minutia of monthly data. I think GL is trying to say "we've made the turn" to future investors.

Another view of this is that demand is relatively fixed in GL's market. Probably only 4 people per day want to travel between Grand Junction and Cheyenne. It doesn't matter if you serve them with a 19 seat airplane (for low metrics) or a 9-seat airplane (for higher metrics). The real question is "why don't you go find a 4 seat airplane that best matches cost to demand?" Even on the "more efficient" month, load factor was 45%. The majors are intolerant of anything below 90%.