Summary
- iAero Airways to cease operations due to lack of financing, ending a chapter for the airline on April 6.
- Chapter 11 filing led to support from lenders, but inability to find a buyer sealed the fate for iAero.
- Complex history of iAero started as Swift Air in 1997, involving acquisitions and rebranding efforts over the years.
Among all the positive news of global airlines exceeding pre-COVID levels, experiencing sustained high demand, and returning to profitability, some bad news crept in late last week. According to various reports of a memo sent to staff by iAero Airways President Timothy Rainey, the United States passenger charter and cargo air carrier announced it would cease operations on Saturday, April 6, 2024.
FreightWaves reported the story, and the closure news follows the September 2023 move by iAero Airways (iAero) to file for Chapter 11 reorganization in the US Bankruptcy Court for the Southern District of Florida – Miami Division. The filing noted that iAero had the support of its senior secured lenders in the form of a restructuring support agreement and a commitment for approximately $22.5 million in debtor-in-possession (DIP) financing.
The time is up for iAero Airways
With no buyer emerging or making an acceptable offer, time has run out for iAero, so Rainey told employees:
“It is with great regret that without continuing DIP financing from our lenders or an alternative lender, we have been directed to prepare to suspend all revenue operations of the airline at the end of the day on April 6.”
The FreightWaves report said the Chapter 11 financing came from Synovus Financing Corporation, which has first priority over the airline’s assets. The support package was designed to allow iAero to operate business as usual and maintain normal operations through the Chapter 11 process, including operating all customer flights as scheduled, and a further $5 million was provided in March.
Photo: Eastern Airlines
Synovus recently agreed to sell 28 of the 737 passenger jets to Eastern Airlines in exchange for assuming $71 million in first-lien debt, but iAero has been unable to find anyone interested in running the DHL cargo and NHL business. Eastern Airlines currently operates four Boeing 767s and two 777s on a charter basis and operated some scheduled services between New York and South America a few years ago.
Some of the other creditors oppose the aircraft sale because they say it benefits Synovus at the expense of all other stakeholders. There are some strong allegations swirling around, and on April 8, a judge for the US Bankruptcy Court for the Southern District of Florida in Miami is scheduled to decide whether to approve the sale of the aircraft to Eastern Airlines.
An interesting family tree
iAero Airways began life as Swift Air in 1997 with Embraer 135 aircraft, adding three Boeing 737-400s in 2006. These aircraft were mainly used for flying sports teams and had VIP-configured cabins. According to Scramble, in 2017, Swift Air acquired the branding and assets of the second iteration of Eastern Airlines.
Those rights were marketed to Dynamic Air, which was owned by one of Swift Air’s owners, and since 2018, Dynamic Air has been operating as Eastern Airlines. Swift Air was acquired by the iAero Group in May 2019 and rebranded itself as iAero Airways in December 2019.
From its headquarters in North Carolina, iAero operates narrowbody cargo jets for DHL Express, and other customers include the US Immigration and Customs Enforcement, the National Hockey League, and professional and college sports teams, with the US Department of Homeland Security as its biggest customer. iAero handled deportation flights for Homeland Security and was chartered to transport migrants to Chicago by Texas Governor Greg Abbot.
iAero has around 30 active aircraft and another 12 parked or in storage, with the active fleet including Boeing 737-300s, 737-400s, 737-800s and 737-800BDSF freighters. When it filed for Chapter 11, it operated about 100 flights per week for DHL, with a mix of its aircraft and using DHL planes crewed and maintained by iAero.
What do you think of this situation? Let us know in the comments.
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