Peachtree City, Ga.-based Global Aviation Holdings has filed for bankruptcy in the United States Bankruptcy Court for Delaware, adding that it will fire 16 percent of its employees over the next three months and reduce its fleet size.
The filing covers Global Aviation’s two airlines, World Airways and North American Airlines, and the company plans to stay open during the restructuring process. According to its website, Global Aviation Holdings operates more than 30 cargo and passenger aircraft and currently flies MD-11 and B747-400 freighters; the company did not comment as to how many it would have to take out of the skies.
Aside from offering significant cargo charter services, Global Aviation said it is the “largest commercial provider of charter air services to the U.S. military.” Industry analysts expect the Department of Defense, which has historically generated 20 percent of the U.S. export market, to drop its activity levels in the future. Evergreen International Aviation may cease operations by the end of the month due, in part, to a decline in military activity.
In the bankruptcy filing, the company said the Air Mobility Command’s decision to cancel expansion flying for next year will cut into revenues and create overcapacity in the military cargo charter industry. World Airways, the company said, will lose 20 percent of its revenue due to the lost military business, leading to a total loss for Global of $54 million in revenues. Officials also said they had anticipated a measured increase in freight demand in 2013, but the market never developed.
“We intend to use the reorganization process to help implement our plan to lower costs, stabilize our businesses, grow revenue, and diversify our product lines,” Global Aviation’s chief executive officer, John Graber, said in a statement. “We have taken a number of steps to improve our operations over the past few months, and we were making great progress; however, the continued worldwide downturn in commercial freight markets, coupled with the military’s decision to immediately curtail its cargo expansion flying, has made it necessary for us to undertake this court-supervised reorganization.”
Global Aviation Holdings emerged from a previous bankruptcy in February.