NEW YORK (AP) -- Global Aviation has filed for bankruptcy protection as the private company which charters flights for the military attempts to slash spending.
The U.S. has exited Iraq and is winding down operations in Afghanistan. The administration of President Barack Obama is pursuing a new national security strategy and lawmakers want billions in budgetary cuts at the Pentagon.
That has affected everyone from major military contractors like Lockheed Martin Corp. to smaller operators like Global Aviation Holdings Inc., where flying soldiers and cargo had made up about 82 percent of its revenue.
The company, which has around 2,000 employees, plans to continue operations during restructuring. Its subsidiaries include World Airways Inc. and North American Airlines Inc.
The company made its Chapter 11 bankruptcy protection filing in U.S. District Court for the Eastern District of New York. It listed debt of between $500,000 and $1 million and assets of less than $50,000. Among its top creditors are Delta Air Lines Inc. and a number of aircraft manufacturers, leasing companies and parts suppliers. Its top creditor is a Defense Dept. payment services company to which it owes $21.7 million, according to the bankruptcy filing.
"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, labor 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," said Chairman and CEO Robert Binns.
For the nine months ended in September, losses at the Peachtree, Ga. company widened to $60.3 million and revenue slipped 12 percent to $775.1 million. Cash and cash equivalents totaled $18 million, while long-term debt surpassed $200 million.
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