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LAXintl
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Great Lakes - Raytheon Debt Update

Wed Sep 07, 2011 10:32 pm

Great Lakes filed a SEC form 8-K with information that it has entered into an amendment to the agreement with Raytheon to delay its $31.1mil balloon payment due Raytheon from August 31st to October 17th, 2011.
The Raytheon debt covers 25 Beech 1900D aircraft

It also noted Great Lakes defaulted on a planned June 30, 2011 payment on $6.9mil in cross-debt covering EMB-120 aircraft. Raytheon has served Great Lakes with termination notices on 6 EMB120 leases.

In order to satisfy the obligation to Raytheon now due October 17, 2011, the company has retained Raymond James & Associates to act as banking advisor in attracting new financing and optimizing repayment terms of its aircraft debt.


So the million dollar question -- who is going to step forward and help cough up the $31 odd mil for these guys?
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ridgid727
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RE: Great Lakes - Raytheon Debt Update

Wed Sep 07, 2011 11:09 pm

ZK just seems to keep getting extensions on this debt. I doubt investors will step up on this one.

When will Raytheon take the 120's?
 
point2point
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RE: Great Lakes - Raytheon Debt Update

Wed Sep 07, 2011 11:32 pm

ZK provides a needed service to many airports in the midwestern/western part of the U.S., and has found its niche here, in spite of anyone approving or disapproving of how they go about their operations.

So Plan A is just to keep extending the financing and that seems sort of it.

Will they - or even can they - somehow find a Plan B to all of this?
 
mikefrommke
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RE: Great Lakes - Raytheon Debt Update

Wed Sep 07, 2011 11:42 pm

Quoting point2point (Reply 2):
So Plan A is just to keep extending the financing and that seems sort of it.

The thing that is probably helping them at this point is that Raytheon probably can't place those birds with any other carriers, so they will find a way to keep them flying at ZK. They are no use to Raytheon sitting in the desert.
 
bjorn14
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RE: Great Lakes - Raytheon Debt Update

Wed Sep 07, 2011 11:44 pm

Excellent article here:

www.easflights.com
"I want to know the voice of God the rest is just details" --A. Einstein
 
KarlB737
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RE: Great Lakes - Raytheon Debt Update

Thu Sep 08, 2011 2:42 am

Quoting LAXintl (Thread starter):
So the million dollar question -- who is going to step forward and help cough up the $31 odd mil for these guys?

Why would anyone intervene and who really thinks that Great Lakes will ever pay up. I'm surprised that Great Lakes hasn't come under an FAA investigation. In the earlier thread someone pointed out that the Beechcraft 1900's have been flown past their expected airlife. Couple this massive financial debt to that and one has to ask at what point does a safety issue begin to creep into this situation which I am sure the FAA would like to avoid.
 
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RE: Great Lakes - Raytheon Debt Update

Thu Sep 08, 2011 3:27 am

Quoting KarlB737 (Reply 5):
I'm surprised that Great Lakes hasn't come under an FAA investigation. In the earlier thread someone pointed out that the Beechcraft 1900's have been flown past their expected airlife. Couple this massive financial debt to that and one has to ask at what point does a safety issue begin to creep into this situation which I am sure the FAA would like to avoid.

Seriously? As long as the 1900s are inspected regularly, they can fly as long as need be. Only when it become uneconomical to maintain them, will the airline then get rid of them. You think our 1900s are the only aircraft to have been flown past there expected life? While ZK might be in a lot of debt with Raytheon, they still have enough money to continue operations, safely! Every major airline works with the FAA to ensure safe operations, we are no different, so I am not sure what you are getting at with the FAA investigation?

Quoting mikefrommke (Reply 3):
The thing that is probably helping them at this point is that Raytheon probably can't place those birds with any other carriers, so they will find a way to keep them flying at ZK. They are no use to Raytheon sitting in the desert.

I wish that was true, but the 7 that we are gradually returning back to Raytheon are being placed. I believe a few are going to New Zealand and I am sure the others could find homes! Lots of the ones you see sitting in ABQ and SLN apparently have incomplete maintenance records, which is why they are still sitting and rotting away!



Quoting LAXintl (Thread starter):
So the million dollar question -- who is going to step forward and help cough up the $31 odd mil for these guys?

This is (and has been) the Million dollar question! The company told us, because of the EAS woes going through congress, and because EAS money equals roughly 50% of our income, there were lots of problems securing financiers, but now with the EAS somewhat safe for now, it might be different! But who knows?

Did it say when the leases on the 6 EMB-120s would be terminated? Sounds like stuff around here is going to get pretty serious and bad...fast!
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cbphoto
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RE: Great Lakes - Raytheon Debt Update

Thu Sep 08, 2011 3:40 am

Quoting LAXintl (Thread starter):
Raytheon has served Great Lakes with termination notices on 6 EMB120 leases

Quick question on the SEC filing! The way I read it, was that we have 6 aircraft that we are leasing, that will be returned to Raytheon! I know we have 6 1900s that we are returning, but I can't tell in all that fancy wording, if those are what they are talking about, or if they are talking about the Brasilias? I see 4 of the bros are on the senior note! Can someone clarify what they think and how they read it? Thanks!

http://www.sec.gov/Archives/edgar/da.../914397/000119312511239838/d8k.htm
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RE: Great Lakes - Raytheon Debt Update

Thu Sep 08, 2011 10:12 am

Quoting mikefrommke (Reply 3):
The thing that is probably helping them at this point is that Raytheon probably can't place those birds with any other carriers, so they will find a way to keep them flying at ZK. They are no use to Raytheon sitting in the desert.

Surprisingly, finding a home for an old, beat up, high time B1900D is relatively easy. Lots of them are getting sent to Africa because they're easily fixed with minimal tools/supplies, good short field takeoff, and good high and hot performance. Raytheon would love for these to go to Africa because then they're not their problem anymore -- they are for as long as they're in the US.

Quoting cbphoto (Reply 6):
Seriously? As long as the 1900s are inspected regularly, they can fly as long as need be. Only when it become uneconomical to maintain them, will the airline then get rid of them. You think our 1900s are the only aircraft to have been flown past there expected life? While ZK might be in a lot of debt with Raytheon, they still have enough money to continue operations, safely! Every major airline works with the FAA to ensure safe operations, we are no different, so I am not sure what you are getting at with the FAA investigation?

You're exactly right! Delta/NW DC9s, anyone? How about UPS DC-8s(yes, I know they're retired, but they were old with lots and lots of time)? Provided they receive proper maintenance and remain airworthy, time on the airframe doesn't mean much aside from decreased operating economics, but that's the carrier's problem...the FAA could care less provided they are regularly and properly maintained and airworthy. "Expected life" is really from the standpoint of the manufacturers who generally build aircraft to last for 20 years/X number of hours/X number of cycles -- this helps advertise the airplane to assure the customer that it won't break in five years, just like a car companies will. Most manufacturers, like Boeing (and apparently Raytheon) advertise 20 years but design and build to last possibly 30 or even 40+. The FAA would have nothing to investigate unless there were improper maintenance procedures or the aircraft were in an unsafe condition. To cut an aircraft's life short because of an arbitrary number wouldn't make sense. The DMV doesn't make you junk your car when it hits 100,000 miles, because most cars are still running just fine at 100k if they're maintained well enough. That also applies to aircraft.

Quoting cbphoto (Reply 7):
or if they are talking about the Brasilias?

Hope not! You guys actually make money with those things! Lol. Not only would a bunch of FAs be out of a job, but with no forseeable replacement, ZK might be in serious danger of bankruptcy. Seeing as they'd start losing lots of aircraft, that would be it for them.

I hate to say this because ZK is a cool little airline, but I'm worried this is the beginning of the end. Its been a long time coming, and after losing the Montana contracts, this could be the death blow. I certainly hope not and I really hope things work out, not just for the airline, but for all of a its awesome employees and for the towns they serve who really need their service. PHX routes would probably be replaced by SeaPort (they tried going for PHX-SOW anyway) which means that TSA in PGA and SOW would lose their jobs, which could happen to potentially dozens of other airports. The residual of ZK going under would be huge for a lot of people, which is why I hope someone might provide the investment. The last thing that several hundred people need in this economy is to lose their job and for lots of these small towns to potentially lose commercial air service or TSA staffing.
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bjorn14
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RE: Great Lakes - Raytheon Debt Update

Thu Sep 08, 2011 10:20 am

Why does ZK not have a fleet renewal plan?
"I want to know the voice of God the rest is just details" --A. Einstein
 
cbphoto
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RE: Great Lakes - Raytheon Debt Update

Thu Sep 08, 2011 11:33 am

Quoting atcsundevil (Reply 8):
Hope not! You guys actually make money with those things! Lol. Not only would a bunch of FAs be out of a job, but with no forseeable replacement, ZK might be in serious danger of bankruptcy. Seeing as they'd start losing lots of aircraft, that would be it for them.

I hate to say this because ZK is a cool little airline, but I'm worried this is the beginning of the end. Its been a long time coming, and after losing the Montana contracts, this could be the death blow. I certainly hope not and I really hope things work out, not just for the airline, but for all of a its awesome employees and for the towns they serve who really need their service. PHX routes would probably be replaced by SeaPort (they tried going for PHX-SOW anyway) which means that TSA in PGA and SOW would lose their jobs, which could happen to potentially dozens of other airports. The residual of ZK going under would be huge for a lot of people, which is why I hope someone might provide the investment. The last thing that several hundred people need in this economy is to lose their job and for lots of these small towns to potentially lose commercial air service or TSA staffing.

Well Said!   

Quoting bjorn14 (Reply 9):
Why does ZK not have a fleet renewal plan?

Simple really! What can replace a Beech 1900? There is currently nothing on the market that will do the job the 1900 does. Which is still why they are in high demand!
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RE: Great Lakes - Raytheon Debt Update

Thu Sep 08, 2011 11:40 am

Quoting bjorn14 (Reply 9):

The long answer: it's mostly because they can't really afford the fleet they've Anther so, there isn't currently an adequate replacement for the 1900D or EMB120. A 19 seat turboprop with good performance, relatively good reliability, and is relatively easy to maintain means that a new aircraft would have some big shoes to fill in a relatively niche market. If such an aircraft were built, they would maybe only sell 100 airframes at best. ZK wouldn't even be able to afford or probably even finance new aircraft should one fit that mold. They've gotten lucky with their current fleet and money issues aside, aircraft to replace their current fleet really just don't exist.

All they really could do is find a different aircraft which may suit their needs and adapt. SeaPort uses newer PC-12s, but 9 seats means less potential EAS revenue. It's also a single engine piston...they can, however, be flown by one pilot, so it's a bit of a trade-off in that respect. They could get a dozen or so seats seats in a King Air B200 or something, but those are expensive. As for the E120, the only potential options are a Saab 340 or Dash 8-200, but even those are getting old, so there's not really a newer direct or even close replacement.

Short answer: their business model sorta sucks and if they're able to survive and start planning for the future, their business model is going to have to change one way or the other, primarily to support a fleet that will likely look very different than it does today.
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ridgid727
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RE: Great Lakes - Raytheon Debt Update

Thu Sep 08, 2011 12:14 pm

Quoting atcsundevil (Reply 11):
Short answer: their business model sorta sucks and if they're able to survive and start planning for the future, their business model is going to have to change one way or the other, primarily to support a fleet that will likely look very different than it does today.

It really does suck, and for years Voss has operated on the premise that there will always be someone there to bail him out when the heat is on. It was a really hard blow to him when Montana highline cities were not approved for his bid.
Voss has for years really mismanaged ZK and this model has been used in some IATA classes in airline management as an example.

So should ZK go down- There is always Gulfstream in the area now, who could very well cherry pick the best EAS routes, and cities involved in a shut down. (When Gulfstream was in bankrupcty they somehow came up with investors in the 20-30 million dollar range) Cape Air is always a possibility as well since they have bid on Northwest Cities for EAS services in the past, and have ordered a new aircraft type to introduce to their operations. Then you also have Island Air from Hawaii who several years ago was interested in setting up an operation in the midwest with EAS services they may be a possibility but Im sure they would be a Dash8 operator and that would produce way too much capacity in many of these markets if they were even interested anymore. Also there is Seaport with their PC12's, so there are possibilities for replacement in the areas served--albeit on a different business model than ZK

ON many of the EAS routes flown by ZK now, a 1900 is way overkill. Some of those cities handle 3 or 4 passengers a day now, and in some the 1900 doesn't meet the traffic they are producing.

Is there really any other airlines that could (even if they had an interest) take these EAS cities on should ZK be put under by creditors.
 
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RE: Great Lakes - Raytheon Debt Update

Thu Sep 08, 2011 2:30 pm

This might be a wild idea, but perhaps DL will come to the aid of Lakes as 31 million is pennies to big D. Big D is exiting a huge amount of small markets in the midwest and needs to find a replacement carrier for the EAS markets it is contracted via Mesaba to serve. If DL can help make Lakes stronger, it then in turn creates the ability for DL to exit sooner the markets it doesn't want to be apart of. Finally, DL can then come up with some sort of interline agreement for the passengers from the Lakes flights to the DL flights in the DL hubs. This makes DL look better in the eyes of the small communities and the customers it is abandoning, creates some stability for this new distant relationship between Lakes and DL and in the end DL gets what it wants.
 
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RE: Great Lakes - Raytheon Debt Update

Thu Sep 08, 2011 6:14 pm

Quoting atcsundevil (Reply 11):
All they really could do is find a different aircraft which may suit their needs and adapt. SeaPort uses newer PC-12s, but 9 seats means less potential EAS revenue. It's also a single engine piston...they can, however, be flown by one pilot, so it's a bit of a trade-off in that respect.

The PC-12 wouldn't be a good choice due to FAA regulations limiting single engine Part 135/121 passenger operations in IFR weather conditions. By the way, the PC-12 is a turboprop not piston powered.
 
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RE: Great Lakes - Raytheon Debt Update

Thu Sep 08, 2011 7:25 pm

Quoting azjubilee (Reply 13):

DL was partnered with Big Sky in BOS and look how that ended-

Big Sky went under.

Big Sky paid more, operated with a better on-time percentage, and had less MX issues with their B1900D's than Great Lakes ever has, not to mention where Big Sky was based, it better served it's market that Great Lakes took over, and subsequently lost.
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RE: Great Lakes - Raytheon Debt Update

Thu Sep 08, 2011 7:51 pm

Quoting azjubilee (Reply 13):
This might be a wild idea, but perhaps DL will come to the aid of Lakes as 31 million is pennies to big D.

Except that the main ZK hub at DEN actually strengthens two of Delta's biggest competitors in the Rocky Mountain region. If Delta were all that concerned about the EAS markets, they wouldn't be orchestrating the pull-down of XJ's EAS flying.

Quoting mikefrommke (Reply 3):
Raytheon probably can't place those birds with any other carriers, so they will find a way to keep them flying at ZK. They are no use to Raytheon sitting in the desert.

They're not much use to Raytheon, either, if they've got a bunch of capital tied up there in the loans which could be used in better ways. I doubt Raytheon is all that interested in remaining a shareholder of GLUX.
 
azjubilee
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RE: Great Lakes - Raytheon Debt Update

Thu Sep 08, 2011 8:15 pm

ScottB - I hadn't thought of that angle. Good point. In retrospect my idea is an expensive way for DL to get out of what they're doing. Disregard... carry on... nothing to see here!
 
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LAXintl
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RE: Great Lakes - Raytheon Debt Update

Fri Sep 09, 2011 6:02 pm

Quoting point2point (Reply 2):
and has found its niche here, in spite of anyone approving or disapproving of how they go about their operations.

Well I would question that niche, as its certainly not one that has been very successful financially.

If you look at ZK earnings, they essentially have broken even, or turned small profits these last 3 or so years, but are only doing it without having to pay much for their aircraft.

I'm not sure the business model runs if they had to actually pay the ownership cost, and not continually push the mountain of payments back.

Kinda like folks living for almost free in a house without mortgage payments for a few years. We know how well that worked for America.

Quoting mikefrommke (Reply 3):
The thing that is probably helping them at this point is that Raytheon probably can't place those birds with any other carriers, so they will find a way to keep them flying at ZK. They are no use to Raytheon sitting in the desert.

I'm not sure they will be in the desert. There seems to be a bit demand globally still for the B1900 including in Africa.

Additionally don't forget Uncle Sam has bought for parting several B1900s to keep its ever growing King-Air reconnaissance platform operational, so the more known US registered B1900 that become available could be a bonus for the DoD.
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RE: Great Lakes - Raytheon Debt Update

Sat Sep 10, 2011 10:36 am

Quoting SLCGuy (Reply 14):
By the way, the PC-12 is a turboprop not piston powered.

You're right -- I do know that or at least they tell me I'm supposed to...that's what I get for commenting on here when I'm falling sleep.

Quoting ridgid727 (Reply 12):
It really does suck, and for years Voss has operated on the premise that there will always be someone there to bail him out when the heat is on. It was a really hard blow to him when Montana highline cities were not approved for his bid.
Voss has for years really mismanaged ZK and this model has been used in some IATA classes in airline management as an example.

You're exactly right. ZK is run by great people, but management has held them back for years. You couldn't be more right when you say Voss expects someone to bail him out, except this time, I don't think they will. The fact that they're in a situation of defaulting on high time, aging, generally oversized aircraft is an indication that they've ignored some pretty glaring issues for quite a while.

This has nothing to do with the economy, because EAS funded airlines get paid whether people fly with them or not...it has everything to do with poor maintenance of their aircraft leading to poor reliability because they over-utilize their airplanes, which pisses off locals, which means they lose their bid on the next EAS RFP. Which brings us to now, after they lost a pretty major market in Montana, and they're still stuck with these aircraft that SHOULD have already begun phasing out for something newer years ago, and now they risk losing the lot.

I hate to admit that ZK should go down, but at the very least, Voss and the entire management team has to go if the airline has a chance in hell of surviving. If they go chapter 11 and restructure/reorganize, build a new management team capable of making the necessary restructuring changes, unload some of their airplanes they're defaulting on anyway -- not to mention they don't work with their business model anymore, and acquire aircraft that will fit whatever new business model they look to reorganize into, then maybe they've got a shot. But, I'm well aware this is a pipe dream. Voss will never let go of the reigns and he will drive his company into the ground. Everyone will lose their jobs but he'll probably still be a rich man with a trophy wife and a nice summer home. Oh, the expletives I could/should use here right now...

Maybe I could run ZK. I'd do a hell of a lot better than Dougie. Maybe we could make it an a.net project lol. With all of the "experts" on here, let's see if we could out our mouths where our money is.
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bjorn14
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RE: Great Lakes - Raytheon Debt Update

Sat Sep 10, 2011 11:28 am

Quoting atcsundevil (Reply 19):
Maybe I could run ZK. I'd do a hell of a lot better than Dougie. Maybe we could make it an a.net project lol. With all of the "experts" on here, let's see if we could out our mouths where our money is.

Market cap for GLUX is only $11.83MM. What I find particularly insane is that at your largest hub you don't have a codeshare with the largest airline at that hub. To me that says what a sorry airline you run.
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RE: Great Lakes - Raytheon Debt Update

Sat Sep 10, 2011 2:15 pm

Quoting cbphoto (Reply 6):
but now with the EAS somewhat safe for now, it might be different! But who knows?

Investors will look at more than one year of stability before handing over $50 million.

Quoting cbphoto (Reply 6):
Did it say when the leases on the 6 EMB-120s would be terminated? Sounds like stuff around here is going to get pretty serious and bad...fast!

The B1900's may be marketable, but the E120s are worthless. I questions whether Raytheon really wants them. ZK may not want them either.

Quoting atcsundevil (Reply 8):
I hate to say this because ZK is a cool little airline, but I'm worried this is the beginning of the end.

Well, they are generally profitable, so it would be unusual to see a profitable airline die.

Quoting bjorn14 (Reply 9):
Why does ZK not have a fleet renewal plan?

Because they chose EAS and they live hand to mouth.

Quoting ridgid727 (Reply 12):
Voss has for years really mismanaged ZK and this model has been used in some IATA classes in airline management as an example.

I'm not sure that is true. They could have gone down the RJ path and they looked at it. I'm not sure that would have been better. That business has been decimated. EAS is in danger too, but I'm not sure the future is so different from flying small RJs. Both are fairly bleak.

Quoting LAXintl (Reply 18):
If you look at ZK earnings, they essentially have broken even, or turned small profits these last 3 or so years, but are only doing it without having to pay much for their aircraft.

I'm not sure the business model runs if they had to actually pay the ownership cost, and not continually push the mountain of payments back.

There is truth to all that, but somebody has to fly EAS...unless they finally kill it.

Quoting atcsundevil (Reply 19):
I hate to admit that ZK should go down, but at the very least, Voss and the entire management team has to go if the airline has a chance in hell of surviving.

That won't help. The problem is that the EAS business model is pretty low margin. They have still done better than all the legacies and have not filed Ch11 yet. The legacies have all renegotiated lease rates over and over, but they didn't get stuck with this balloon payment. The question is whether Raytheon wants to shut down ZK. Another thing to consider is that Raytheon is a big defense contractor and if Raytheon kills ZK, they will gain a lot of enemies in the House and Senate. The EAS program has some pretty powerful support which is why it seems to survive despite so much pressure against it.

Quoting bjorn14 (Reply 20):
Market cap for GLUX is only $11.83MM. What I find particularly insane is that at your largest hub you don't have a codeshare with the largest airline at that hub.

When did they code share with UA end? I thought it was a dual code share with both F9 and UA?
 
KarlB737
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RE: Great Lakes - Raytheon Debt Update

Sat Sep 10, 2011 3:15 pm

Quoting cbphoto (Reply 6):
Every major airline works with the FAA to ensure safe operations, we are no different, so I am not sure what you are getting at with the FAA investigation?

Above, the question you posed.

The answer to your question below:

Quoting atcsundevil (Reply 19):
...it has everything to do with poor maintenance of their aircraft leading to poor reliability because they over-utilize their airplanes, which pisses off locals, which means they lose their bid on the next EAS RFP. Which brings us to now, after they lost a pretty major market in Montana, and they're still stuck with these aircraft that SHOULD have already begun phasing out for something newer years ago, and now they risk losing the lot.


Here is the potential result of maintenance issues as stated in another thread:

FAA Fines Alaska Air Over Maintenance Violations
http://www.airliners.net/aviation-fo...eneral_aviation/read.main/5251936/

[Edited 2011-09-10 08:19:59]
 
ridgid727
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RE: Great Lakes - Raytheon Debt Update

Sun Sep 11, 2011 3:22 am

Quoting atcsundevil (Reply 19):
Voss will never let go of the reigns and he will drive his company into the ground. Everyone will lose their jobs but he'll probably still be a rich man with a trophy wife and a nice summer home. Oh, the expletives I could/should use here right now...

You hit the nail on the dead. The Czar in Cheyenne will not loosen the reins, The company will go down.

Quoting enilria (Reply 21):
Well, they are generally profitable, so it would be unusual to see a profitable airline die.

Profitable? More like cooked books. I think F9 could turn profits if they didn't pay for the leases on the aircraft they fly, and keep pushing the baloon payments bak another 3 months.
 
cbphoto
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RE: Great Lakes - Raytheon Debt Update

Thu Sep 15, 2011 6:13 am

Well..another update! Looks like Raytheon is dumping all of it's stock in ZK! It may have been previously reported, but either way, its a pretty sizable amount of stocks!

http://xml.10kwizard.com/filing_raw.php?repo=tenk&ipage=7807290
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usxguy
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RE: Great Lakes - Raytheon Debt Update

Thu Sep 15, 2011 8:28 pm

Doug's ex wife also sold her stock in the company this summer as well..... cbphoto - I mentioned it in my blog (linked in one of the posts above) and it was also leaked on one of the pilot message boards. This could simply be part of the deal to renegotiate, AGAIN, with Raytheon over the planes.
xx
 
cbphoto
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RE: Great Lakes - Raytheon Debt Update

Tue Sep 20, 2011 7:35 pm

http://www.wyomingbusinessreport.com/article.asp?id=59929

Looks like ZK has made a public announcement on the stocks as well as the balloon payment! Either way, things are not looking very good for Lakes!
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enilria
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RE: Great Lakes - Raytheon Debt Update

Tue Sep 20, 2011 7:41 pm

That's pretty bleak. Who would buy shares in a company that is basically doomed?
 
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LAXintl
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RE: Great Lakes - Raytheon Debt Update

Tue Sep 20, 2011 7:52 pm

You can read the SEC filing at:
http://www.sec.gov/Archives/edgar/da...4397/000119312511242171/dposam.htm

Essentially all they are doing it flooding the market with additional shares with hopes they will generate enough dollars to cover a portion of the Raytheon payment.
However with an existing share price of sub $1, even selling the proposed 5 million odd share is not going to generate anywhere close to the needed $31.1mil in payments.

In the filing the company however notes:
We will need to refinance the obligation with Raytheon Aircraft Credit Corporation (“Raytheon”), our largest single shareholder, secure alternative sources of financing, raise additional capital through an equity offering, or achieve any combination thereof to be able to satisfy this obligation. There is no assurance that we will be successful in refinancing the debt or obtaining additional financing, and, if available, there are no assurances that the financing will be at commercially acceptable terms.

My guess is that ZK hopes a $5mil payment might be enough to encourage Raytheon to give it even more time on the remains of the $31.1mil payment.

In otherwords kick the can down the road again......
From the desert to the sea, to all of Southern California
 
ridgid727
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RE: Great Lakes - Raytheon Debt Update

Tue Sep 20, 2011 7:58 pm

It sounds as though Raytheon is frustrated with the ongoing Saga though.

I wonder if any of those cities served exclusively by ZK are attempting to attract toher carriers to service their city and markets. As far as the EAS cities go (which most of them are) it would be cherry picking season for someone who wanted to pick up those contracts. Wonder if Gulfstreams Montana operation would be interested in picking any of those markets up.
 
FlyASAGuy2005
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RE: Great Lakes - Raytheon Debt Update

Tue Sep 20, 2011 8:07 pm

Quoting azjubilee (Reply 13):

For a minute I would have said you were onto something but DL would have wanted something big in turn. At least with the cash injection to Trans States and Pinnacle, DL still has virtual control over those 900s and 175s. The brunt of ZK's flying is through DEN which sees a lot of pax xfer to UA. I don't think DL would want to see that continue. If anything, I think they would want them to strink in DEN markets and that wont make much sense for Great Lakes. Before that, if no one bids for the flying through MSP, I dont think they will continue to fly CR2s at a 30% LF. They may very well just pull out anyway and take their chances in court.


Quoting enilria (Reply 27):

So, I guess it's not that unusual to see a profitable airline go down  
What gets measured gets done.
 
ridgid727
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RE: Great Lakes - Raytheon Debt Update

Tue Sep 20, 2011 8:09 pm

Quoting FlyASAGuy2005 (Reply 30):
For a minute I would have said you were onto something but DL would have wanted something big in turn. At least with the cash injection to Trans States and Pinnacle, DL still has virtual control over those 900s and 175s. The brunt of ZK's flying is through DEN which sees a lot of pax xfer to UA. I don't think DL would want to see that continue. If anything, I think they would want them to strink in DEN markets and that wont make much sense for Great Lakes. Before that, if no one bids for the flying through MSP, I dont think they will continue to fly CR2s at a 30% LF. They may very well just pull out anyway and take their chances in court.

If DL did show an interest, I think most of those Mountain States routes would probably be transferred to SLC or MSP
 
cbphoto
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RE: Great Lakes - Raytheon Debt Update

Tue Sep 20, 2011 8:26 pm

Quoting LAXintl (Reply 28):
My guess is that ZK hopes a $5mil payment might be enough to encourage Raytheon to give it even more time on the remains of the $31.1mil payment.

That, or if they sell enough, they might try to attract a bigger investor to foot the rest of the 30+ Million they owe!

Quoting ridgid727 (Reply 29):
It sounds as though Raytheon is frustrated with the ongoing Saga though

Its been known for a few years throughout the company that Raytheon wants little to nothing to do with us and the airline industry, when it comes to the 1900s. Once Air Midwest went under, support and liability almost became to much for them, and it had been rumored for a long time that Raytheon looked at Lakes a big liability rather then any sort of business opportunity. Either way I have a feeling is Lakes does not come up with most if not all of the money, they will pull the plug this time around!
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bjorn14
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RE: Great Lakes - Raytheon Debt Update

Tue Sep 20, 2011 8:39 pm

Quoting ridgid727 (Reply 31):

If DL did show an interest, I think most of those Mountain States routes would probably be transferred to SLC or MSP

I don't think so as DL dropped BTM why would they want to pick up even lesser enplaned cities.
"I want to know the voice of God the rest is just details" --A. Einstein
 
ridgid727
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RE: Great Lakes - Raytheon Debt Update

Tue Sep 20, 2011 9:35 pm

Quoting bjorn14 (Reply 33):
I don't think so as DL dropped BTM why would they want to pick up even lesser enplaned cities.

Was unaware that DL dropped BTM. It is still bookable thru August of 2012.

I read sometime ago that Boeing discharged a $10million dollar debt last spring for Lakes for like a payment of $1.5 mil.

Here is the article that details the payment and discharge of debt.

Top
 
ScottB
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RE: Great Lakes - Raytheon Debt Update

Tue Sep 20, 2011 10:03 pm

Quoting LAXintl (Reply 28):
Essentially all they are doing it flooding the market with additional shares with hopes they will generate enough dollars to cover a portion of the Raytheon payment.

Actually, this is Raytheon selling its stake:

Quote:
The shareholder of Great Lakes Aviation, Ltd. identified under “Selling Shareholder” may offer and sell 5,371,980 shares of common stock under this prospectus. We issued these shares in a private transaction in December 2002. We will receive none of the proceeds from the sale of the shares by the selling shareholder.
Quote:
The following table presents information regarding the selling shareholder, Raytheon Aircraft Credit Corporation (“Raytheon”), a beneficial holder of more than 10% of our outstanding common stock.
 
KarlB737
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RE: Great Lakes - Raytheon Debt Update

Tue Sep 20, 2011 10:07 pm

Quoting cbphoto (Reply 26):
ZK has made a public announcement on the stocks as well as the balloon payment!

From the article:
"Great Lakes reported total operating revenue of $125.4 million in 2010,"

You would think that they could have at least paid $15 million from last years income as noted above to significantly decrease their debt by 50%. I realize that is a gross figure however spread out over 12 months it might not have been so bad instead of letting the company get against the wall as they are today.
 
smoot4208
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RE: Great Lakes - Raytheon Debt Update

Tue Sep 20, 2011 10:09 pm

Have they already returned their 6 EMB-120s? It said that the 6 B1900Ds that Raytheon terminated the leases on will be returned from late august to December of this year.

To me, the only way ZK will be able to pay that money back is to negotiate with Raytheon on giving back some of the B1900Ds that they own.
 
cbphoto
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RE: Great Lakes - Raytheon Debt Update

Tue Sep 20, 2011 10:19 pm

Quoting KarlB737 (Reply 36):
You would think that they could have at least paid $15 million from last years income as noted above to significantly decrease their debt by 50%. I realize that is a gross figure however spread out over 12 months it might not have been so bad instead of letting the company get against the wall as they are today.

You would think, but ZK has not been known for it's "great" business decisions! ZK should have done a lot of things differently in order to have avoided the spot they are in!

Quoting smoot4208 (Reply 37):
Have they already returned their 6 EMB-120s? It said that the 6 B1900Ds that Raytheon terminated the leases on will be returned from late august to December of this year.

To me, the only way ZK will be able to pay that money back is to negotiate with Raytheon on giving back some of the B1900Ds that they own.

I don't believe we are slotted to return any EMBs, at least not that I have read. In the SEC filling they mentioned 6 aircraft that were to be returned and I believe those 6 were the 1900s they mentioned in this article that will all be returned by December. In regards to to returning the 1900s to Raytheon, are you talking about aircraft that Lakes or Raytheon owns? Lakes only owns 4 (or so) 1900s, which might be a small payment to Raytheon, but no where near the 32 Million they owe!
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LAXintl
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RE: Great Lakes - Raytheon Debt Update

Wed Sep 21, 2011 7:39 pm

Quoting ScottB (Reply 35):
Actually, this is Raytheon selling its stake:

Thanks for clarifying that.

In other words, this does nothing zero about the $31.1mil balloon payment.

Quoting KarlB737 (Reply 36):
From the article:
"Great Lakes reported total operating revenue of $125.4 million in 2010,"

You would think that they could have at least paid $15 million from last years income as noted above to significantly decrease their debt by 50%. I realize that is a gross figure however spread out over 12 months it might not have been so bad instead of letting the company get against the wall as they are today.

ZK does not have $15mil to pay. Their net profit for 2010 was barely $5mil, and that is essentially with them skating by without aircraft ownership payments. The business would be underwater if they had to pay true cost for their fleet.

As I mentioned earlier this year they defaulted on a $6.9mil payment. The money is simply not there. Cash on hand at the end of Q2 was only $2.8mil.
From the desert to the sea, to all of Southern California
 
GQfluffy
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RE: Great Lakes - Raytheon Debt Update

Thu Sep 22, 2011 3:23 am

Quoting ridgid727 (Reply 31):
If DL did show an interest, I think most of those Mountain States routes would probably be transferred to SLC or MSP

Half the reason Great Lakes never made it in Montana was it's flying most if not all of those small EAS routes out of DEN versus BIL. How is SLC or MSP supposed to work when those small cities want to go to BIL, not back and forth wasting at least half the day?

EDIT- Not that these routes are all that profitable anyway...

[Edited 2011-09-21 20:23:32]
This isn't where I parked my car...
 
ridgid727
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RE: Great Lakes - Raytheon Debt Update

Thu Sep 22, 2011 3:31 am

Quoting GQfluffy (Reply 40):
Half the reason Great Lakes never made it in Montana was it's flying most if not all of those small EAS routes out of DEN versus BIL. How is SLC or MSP supposed to work when those small cities want to go to BIL, not back and forth wasting at least half the day?

EDIT- Not that these routes are all that profitable anyway...

It doesn't. Im stating that DL would not be interested in investing in a commuter airline only flying between Havre and Billings. If there is nothing to ad to the DL route structure why would they even show an interest? Im sure they would only be interested in getting passengers from say Havre to Atlanta where they actually see some revenue generated as feed (or any of the cities that ZK serves to DEN. Isn't that what a hub and spoke operation is all about? So with the small amount of flights DL offers from Den, they would probably only be interested in sending their investment in a commuter carrier though one of their hubs-- the obviouse would be SLC or MSP based on the current route structure of ZK
 
Rdh3e
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RE: Great Lakes - Raytheon Debt Update

Thu Sep 22, 2011 4:38 am

Quoting LAXintl (Reply 39):
ZK does not have $15mil to pay. Their net profit for 2010 was barely $5mil, and that is essentially with them skating by without aircraft ownership payments. The business would be underwater if they had to pay true cost for their fleet.

As I mentioned earlier this year they defaulted on a $6.9mil payment. The money is simply not there. Cash on hand at the end of Q2 was only $2.8mil.

Net Income (profit) doesn't really relate to debt payments. Debt payments is really what you mentioned in your last sentence, Cash on Hand. Cash is king. You had the right answer, I just wanted to reiterate.
 
KarlB737
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RE: Great Lakes - Raytheon Debt Update

Thu Sep 22, 2011 4:25 pm

Quoting LAXintl (Reply 39):

ZK does not have $15mil to pay. Their net profit for 2010 was barely $5mil, and that is essentially with them skating by without aircraft ownership payments. The business would be underwater if they had to pay true cost for their fleet.

As I mentioned earlier this year they defaulted on a $6.9mil payment. The money is simply not there.

In essence is sounds like either ZK is done or a clone of RAH comes along and:

1. Pays off the total debt.
2. Inserts some newer and additional turboprops.
3. Cans Doug Voss once and for all.
4. Scoops up the increasing number of abandoned small regional routes that Frontier and Delta are dumping.
 
cbphoto
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RE: Great Lakes - Raytheon Debt Update

Thu Sep 22, 2011 4:42 pm

Quoting KarlB737 (Reply 43):
In essence is sounds like either ZK is done or a clone of RAH comes along and:

1. Pays off the total debt.
2. Inserts some newer and additional turboprops.
3. Cans Doug Voss once and for all.
4. Scoops up the increasing number of abandoned small regional routes that Frontier and Delta are dumping.

That would be nice, but I am not even sure who would do that? Though as I type this, I remembered that Gulfstream International found a financier to get them out of BK, but I somehow find it hard to believe that anyone would invest money and time into ZK!

Either way, we have roughly 3 weeks until the "new" D-day, so I guess we will have to see what happens!
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boslax
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RE: Great Lakes - Raytheon Debt Update

Thu Sep 22, 2011 4:43 pm

Could Raytheon already have a deal to place the ZK aircraft into someone else's fleet, such as Gulfstream. May take a little time to ramp-up, buf if Raytheon is finally fed up with Great Lakes and has some faith in the Gulfstream management team, could be a quick and painless solution for Rayteon.
 
KarlB737
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RE: Great Lakes - Raytheon Debt Update

Thu Sep 22, 2011 4:55 pm

Quoting cbphoto (Reply 44):
I somehow find it hard to believe that anyone would invest money and time into ZK!

I agree that is why someone else would come in and make the much needed changes that I listed so the airline would become something positive and not remaining as ZK has operated it.
 
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enilria
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RE: Great Lakes - Raytheon Debt Update

Thu Sep 22, 2011 5:15 pm

Quoting FlyASAGuy2005 (Reply 30):
Quoting enilria (Reply 27):
So, I guess it's not that unusual to see a profitable airline go down  

The argument has been made that they were only profitable with free aircraft.

Quoting ScottB (Reply 35):
Actually, this is Raytheon selling its stake:

Quote:
The shareholder of Great Lakes Aviation, Ltd. identified under “Selling Shareholder” may offer and sell 5,371,980 shares of common stock under this prospectus. We issued these shares in a private transaction in December 2002. We will receive none of the proceeds from the sale of the shares by the selling shareholder.

Raytheon is dumb. They are going to get close to nothing. The smartest thing for Raytheon to do is to announce some sort of deal that will cause the stock to jump *and then* sell the stock. They are creating their own crisis and then selling into it? That is textbook idiocy.

Quoting KarlB737 (Reply 43):
In essence is sounds like either ZK is done or a clone of RAH comes along and:

I wonder how much interest RJET has in this situation. F9 probably gets a lot of high yield connecting feed from ZK. Trouble is that even with all the excess RJs in the RJET fleet, they are not the right A/C for ZK. I suppose it is just more bad news for F9.
 
ScottB
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RE: Great Lakes - Raytheon Debt Update

Thu Sep 22, 2011 6:16 pm

Quoting enilria (Reply 47):
Raytheon is dumb. They are going to get close to nothing. The smartest thing for Raytheon to do is to announce some sort of deal that will cause the stock to jump *and then* sell the stock. They are creating their own crisis and then selling into it? That is textbook idiocy.

Maybe yes, maybe no. That really depends on what they can get for the mortgaged aircraft if they can take them away from Great Lakes. Having an extra few million from the sale of their stake (assuming they could manage to get the share price to double from its current level) may not be worth getting locked into several more years of ZK limping along and flying the remaining value out of those aircraft.
 
cbphoto
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RE: Great Lakes - Raytheon Debt Update

Thu Sep 22, 2011 8:00 pm

Quoting boslax (Reply 45):
Could Raytheon already have a deal to place the ZK aircraft into someone else's fleet, such as Gulfstream. May take a little time to ramp-up, buf if Raytheon is finally fed up with Great Lakes and has some faith in the Gulfstream management team, could be a quick and painless solution for Rayteon.

Well, Gulfstream is apparently getting a few Saab 340s (ex XJ?) starting in November, so not sure that they would even want more 1900s. I can say a few of the 1900s we returned over the last month or so, have been getting overhauled and are apparently on there way to New Zealand for an operator out there! Raytheon can find homes for the 1900s if they want and while they might have a high number of cycles on them, they also have up to date maintenance records on them. I had heard the ones laying around in Selina and Albuquerque are missing some of those records, hence why they are rotting away!
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