PenAir Files Chapter 11, Closes Denver and Portland Hubs

Bankruptcy
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Anchorage, Alaska-based Peninsula Airways, Inc. (PenAir) filed for voluntary bankruptcy protection under Chapter 11 over the weekend as it looks to reorganize its debts. It is closing its hubs in Portland, Oregon and Denver, Colorado and focusing its efforts on its more profitable Anchorage and Boston hubs.

In a company press release, PenAir said on August 8, that it is ceasing operations of all non-EAS routes in the Pacific Northwest. This includes air travel on PenAir between Portland and Redding, Arcata-Eureka, North Bend, or Klamath Falls.

The last scheduled flights in and out of Portland were on August 7.

“The steps we are taking with closing Portland area routes will allow PenAir to cut costs, while management continues its focus on financial stability and safe operations,” said PenAir CEO and Chairman Danny Seybert.

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Peninsula Airways is a private, family-owned business that has been in business since 1955. As one of the oldest family-owned airlines in the U.S., it is also one of the largest regional airlines in Alaska and the Northeast U.S.

PenAir flies to 25 destinations with hubs in Boston and Anchorage. It flies to eight destinations within Alaska, as well as the Denver and Boston areas. Passengers on all other routes can expect continued operations with no changes to flight times or services.

The company, which currently employs over 700, participates in a U.S. Transportation Department program known as Essential Air Service, which is designed to provide small communities a minimum level of scheduled air service.

According to documents submitted by David Richards, the company’s Chief Operating Officer, the bankruptcy was necessary to stem the “rapid deterioration” in financial results.

For the fiscal year ended March 31, 2017, PenAir reported revenue of $99.0 million and a pretax loss of $8.0 million. In April and May 2017, PenAir reported a loss of $577,000. The company owes between $10.0 million and $50.0 million to its creditors, and plans to cut its fleet of 19 aircraft.

Daniel P. Seybert, Chairman, owns a controlling stake of approximately 57% of PenAir. Orin D. Seybert, who founded the company in 1955 in Pilot Point, Alaska, is the second-largest shareholder, with a 17.6% interest.

PenAir expanded its footprint outside of Alaska in 2012 but its new hubs in Portland and Denver have not lived up to expectations. As a result, the company is winding down those two operations to focus on its very successful operations in Boston.

 

Sources

Cases Report,” U.S. Bankruptcy Court, District of Alaska, last accessed August 7, 2017.

PenAir Plans to Shed Denver, Portland Hubs in Chapter 11,” The Wall Street Journal, August 7, 2017.

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Categories: Bankruptcies, News

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