Military move bankrupts Global
06 / 02 / 2012
WORLD Airways’ parent Global Aviation Holdings has filed for bankruptcy.
Its US military charter business – the largest in the world – has been hampered by the US’ forces exit from Iraq, defence spending cuts, labour costs and mounting debt.
Less than a fortnight before, the Pentagon outlined a US$487 billion slash in spending until 2022.
Shipping cargo and soldiers constitutes over 75 per cent of Global Aviation’s revenue and, with the news that the US plans to end combat operations in Afghanistan by 2014, the future looks bleak.
Global lost $60.3 million on revenue of $775.1 million in the nine months ended 30 September 2011, compared with a year-earlier loss of $6.9 million on revenue of $877 million.
“While Global Aviation has navigated fluctuations in demand in the past, the current decrease, coupled with high labour and fixed costs, excess aircraft and an overleveraged balance sheet, requires [us] to restructure,” chief financial officer William Garrett comments.
Global will dismiss almost a tenth of its workforce by 5 April – 140 workers out of 1,782. Executive salaries are also being cut by 10 per cent.
The company, whose affiliates North American Airlines and World Airways are also included in the bankruptcy, says it plans to operate normally during the process.