Creditor Advisory for a Regional Airline Lender

Challenge

Through an acquisition and expansion of routes, a regional airline had quickly become the second largest in the region in which it operated. After this initial success, its parent company committed to a large order of new planes, which came at a significant cost. The airline fell short of the aggressive growth projections laid out in its business plan and rapidly started to drain cash and profits.

How we helped

Riveron was appointed by the bank that served as the primary provider of capital and operational leases for the new aircraft fleet after the airline missed payments. We conducted a comprehensive review to validate the revised business plan and assessed the airline’s liquidity and cash flow generation capacity for ongoing viability. We then prepared alternative scenarios, including ongoing business projections, sale of the business, bankruptcy, and liquidation for the bank and other creditors to consider when undertaking their path forward.

Results

Based on the scenario optionality analysis presented by Riveron, the bank decided to take a preemptive step and embargoed the company’s fleet. Three months later, the airline filed for bankruptcy with a remaining debt of approximately $300M.