Washington Dulles-based specialist ACMI provider Gemini Air Cargo has filed for Chapter 11 bankruptcy protection for the second time in two years, alongside affiliates Gemini Cargo Holdings, Gemini Leasing and Gemini Cargo Logistics.
The airline, that owns a fleet of DC-10 and MD-11 freighters, has been struggling with rising debts caused, primarily, by rising fuel costs.
Many air crew have already been furloughed, having received a letter from the company. A letter to affected air crew outlined the problems faced:
"We regret to inform you that, due to the extreme financial instability of Gemini Air Cargo, Inc ("Gemini"), your position is being eliminated, and your employment with Gemini will end effective today, June 17, 2008.
In this difficult economic climate, marked most prominently by skyrocketing fuel costs, Gemini's operating performance, working capital, and overall financial stability have eroded significantly. In an effort to persevere and sustain its current operational capacity, Gemini has actively pursued a variety of financial remedies including financing, additional capital, loan forgiveness and sale of the business. Unfortunately, however, such remedies, to date, have either run their course or been unattainable. Consequently, as of today, Gemini does not have the financial wherewithal to run its business at current operational levels, and program cuts must be implemented immediately, which regrettably involves the elimination of jobs, such as yours, throughout the United States and abroad.
We are sorry that circumstances were such that we were unable to give you more advanced warning, but, as discussed above, our efforts were focused on securing the financial solutions that ultimately would have allowed Gemini to avoid the drastic action it must now take."
Acting chief executive officer, George Gonzalez clarified the situation further with a general letter to employees: "Today, Gemini filed for protection under Chapter 11 of the US Bankruptcy Code. Nevertheless, we will continue operating our business as usual. To fund this process, we have secured an additional loan commitment of up to $14 million from the company's existing senior lender. We will have more details for everyone on Friday, after the court has ruled on our initial filing requests.
"The decision to file for bankruptcy was brought on by the difficult times facing the airline industry - most visibly record-shattering fuel prices - coupled with revenue shortfalls we have encountered over the past 12 months: First the MD-11 tail tip in Dubai last June, followed by disappointing activity during this year for the DC-10s from the US military and ACMI customers (driven partly by fuel prices).
"Yet Gemini continues to have strengths, and in important ways we are stronger than a year ago. The MD-11 operation has stabilized, with reliability and other performance measures at record levels. Demand for MD-11s has increased as it is a highly fuel-efficient freighter, increasing its cost advantages over the B747-200 classics, DC-10s, and other competitors.
"We also have taken actions to cut our costs. With the softening demand for the DC-10s, earlier this year we elected to C check only 3 aircraft, yet these are not currently operating at full capacity. Yesterday we reduced our crews to match our current operating needs, and also the marketing staff focused on the DC-10s.
"During the bankruptcy, we will be seeking investors for Gemini. As part of our filing, we submitted bidding procedures and expect to have a transaction complete during the summer. This we believe is in the best interests of the employees, customers, investors, vendors, and other stakeholders."
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Source: aircargonews.net
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