Great Lakes Defaults on Loan
According to a federal filing, Great Lakes Aviation has defaulted on a $27.5 million loan that it just took out back in December. This leaves the Cheyenne-based airline facing potential seizure of “substantially all” its assets by Canadian lender Callidus Capital Corp. The loan was acquired in order to pay off loans from Crystal Financial LLC and GB Merchant Partners without having to resort to more extreme measures.
Regardless of what action Callidus Capital will decide take, the interest rate on Great Lakes’ loan increased from 14 to 17 percent as a result of the default. The aviation company is already in financial hot water; their stock has fallen by more than 60 percent since July 1 and was trading at 32 cents per share this afternoon. The company reported a net loss of $7.4 million in 2014, hit hard by federal safety regulations.
The company said that it doesn’t think it will be able to meet its loan requirements for the rest of 2015. All of this has raised serious concerns about the longevity of Great Lakes Aviation.
Great Lakes Aviation ceased flights from Sheridan County Airport back on March 31, and Airport Manager John Stopka said that the flights had only been continued to that point as a courtesy. Regulations had required Great Lakes to remove seats from its aircraft, causing the company to lose money on Sheridan flights at an alarming rate.
A pilot shortage has also had severe ramifications for the company. New Federal Aviation Administration regulations require all pilots seeking an Air Transport Pilot (ATP) certificate after July 31, 2014, to complete a special certification program in addition to having 1,500 hours of flight time. This has made it difficult for smaller carriers to employ pilots, and the effects are being felt across the country.