12/07/2024 1:51 PM


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Alaska’s RavnAir bankruptcy while awaiting government aid shows regional airlines’ challenges

WASHINGTON/CHICAGO (Reuters) – RavnAir Group, the largest regional carrier in Alaska, filed for bankruptcy on Sunday and grounded all of its 72 planes, saying it was clear that government aid would not arrive before it ran out of cash in the midst of an “astonishing” decline in bookings and revenue due to the coronavirus.

FILE PHOTO: Delta Air Lines passenger planes are seen parked due to flight reductions made to slow the spread of coronavirus disease (COVID-19), at Birmingham-Shuttlesworth International Airport in Birmingham, Alabama, U.S. March 25, 2020. REUTERS/Elijah Nouvelage

Its Chapter 11 filing underscores the challenges facing other U.S. regional carriers that, like larger airlines, are seeking federal aid to help them through the worst downturn the industry has ever faced.

RavnAir – which has a partnership with Alaska Airlines and interline agreements with American Airlines, United Airlines and Delta – said it applied on Friday for federal payroll support but did not know if or when it would be granted.

The Trump administration is weighing applications from numerous airlines as it considers how to distribute as soon as this week up to $32 billion for passenger and cargo carriers and airport contractors under the CARES Act meant to help the sector cover payroll costs.

Regional airlines, which tend to serve remote communities, are particularly vulnerable to the downturn because they are not publicly traded and cannot access capital markets. They have asked the U.S. Treasury Department to prioritize assistance for them when awarding the grants.

Many of RavnAir’s customers fly on Medicaid-subsidized tickets, it said, while other key customers include companies in industries like oil & gas, mining, and tourism where business is suffering. In addition, by mid-March it was receiving demands from rural hubs and villages around Alaska not to fly passengers to or from their communities, it said in a court filing.

The tale of RavnAir reflects airlines’ woes across the country that began seeing a dramatic drop in bookings around March 12 when it became clear that coronavirus outbreaks were increasing across the world.

RavnAir said it had laid off almost all of its workforce and suspended operations before filing for Chapter 11 in Delaware on Sunday, but hopes to be able to restart on the other side of bankruptcy, particularly if it receives government relief.

In a letter posted Sunday, RavnAir Chief Executive Dave Pflieger said the airline was working to “resume the vital air service you depend on to get home to your families, to your businesses, to medical appointments, and to other duties that are essential to our communities and the state of Alaska.”

On Sunday, top Democrats urged Treasury Secretary Steven Mnuchin to move quickly to release the grants without imposing unreasonable conditions.

Reporting by David Shepardson and Tracy Rucinski; Editing by Lisa Shumaker and Marguerita Choy

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