Avantair Shuts Down, Seeks ‘Alternative Financing’
Clearwater, Fla.-based Piaggio Avanti fractional provider Avantair shut down today and furloughed employees as it “seeks alternative financing arrangements that it hopes will enable it to resume operations as quickly and efficiently as possible,” according to a June 26 8-K SEC filing. The company also received notice on Monday of a customer class-action lawsuit and is in breach of a lease agreement for its six core airplanes, with their repossession by lessors a possibility.
“Today, Avantair conducted a furlough of its employees as it addresses liquidity issues. It has requested that several specialized employees remain with the company voluntarily as it pursues alternative financing arrangements,” it said in a statement provided to AIN. “The company regrets having to enter into this process and for the inconvenience this brings to Avantair’s owners and card holders but believes it to be the most prudent action at this time. It is hopeful that it will soon be in a position to resume operations.”
Avantair’s fleet of 56 Avanti twin turboprops has been grounded since June 6 following allegations that the company was not properly tracking time-controlled parts on its aircraft, requiring detailed inspections to ensure compliance with FAA regulations. This is the second extended “voluntary” grounding of the Avantair fleet in recent months–the operator suffered a nearly three-week grounding in late October prompted by maintenance issues surrounding an incident last July in which an Avantair Avanti shed an elevator during a flight.
The customer lawsuit was filed by Heisman Square, an Avantair fractional shareowner, in Oklahoma County District Court in March, saying the incident that led to the first grounding should have been disclosed when it was buying a share in the program in August. On June 24, Avantair “received notice of service of [this] class-action lawsuit.”
Meanwhile, the company is apparently now involved in a fight to prevent its six core airplanes from being repossessed. On June 13, Avantair reached a forbearance agreement with Midsouth Services and Clear Aircraft related to past-due lease payments for these core airplanes, the 8-K filing says. But on June 18 and 25, the company was notified that it was in breach of this forbearance agreement, “and the lessor has been exercising…all rights and remedies available under the [agreement] and applicable law, including taking possession of its leased aircraft and aircraft engines.”
Avantair also operates 43 fractionally owned aircraft and seven “leased and company-managed” Avantis, according to a June 13 SEC 10-Q filing that discloses the company’s financial situation at the end of its fiscal third quarter, ending March 31. In the quarter, Avantair posted an $8.33 million dollar loss, compared with a nearly $1.6 million loss during the same period last year. Its total accumulated deficit is $122.75 million, the filing says.