Miami Air International filed for Chapter 11 bankruptcy protection in the Southern District of Florida Bankruptcy Court on 24 March after flight operations came to a near-standstill as contract cancellations swelled.

The charter airline has a fleet of six Boeing 737-800 aircraft on lease from various lessors: Avolon, AerCap (two), SMBC Aviation Capital, Aergo Capital and Aviation Capital Group. The aircraft leases expire between 2021 and 2025 and contain provisions for certain annual rental escalations. 

The court documents list 804 creditors, including SMBC Aviation Capital and Aviation Capital Group. 

KLM Dutch Airlines, Delta Air Lines, Boeing, United Parcel Service and World Fuel Services are among the top 20 largest unsecured creditors.

TSI Holding, a St. Louis-based family-owned and operated investment company established by John Hauck and affiliated investors, is the listed owner of Miami Air. 

Neither Miami Air nor Paul Battista, the law firm representing the carrier, returned Airfinance Journal’s phone calls regarding the filing.

Less Lift

Miami Air is requesting court approval to reject certain leases as part of an "effort to right-size the fleet under the existing economic conditions”.

The carrier has "identified cost savings to be achieved through a fleet reduction" due to a decrease in costs associated with inventory and maintenance. The monthly rent for each of the leases its seeks to reject is approximately $200,000, according to the filing.  

Miami Air seeks to return a 737-800 on lease from Avolon with Wells Fargo as the owner trustee and two 737-800s on lease from Aercap. Wilmington Trust is the owner trustee of those units. 

"The debtor (Miami Air) has experienced a rapid plunge in bookings and an increase in cancellations. In fact, Miami Air’s entire retail flight operation has ground to a halt," stated the filing. "At present and for the foreseeable future, Miami Air is only scheduled to fly certain flights for the United States military under the Civil Reserve Air Fleet (CRAF) programme, pursuant to which Miami Air provides flight services to the United States Air Force Air Mobility Command (USAF AMC) in connection with transporting troops and cargo."

The carrier's website says it offers charter flights for professional and collegiate sports teams, dignitaries and high-profile individuals, government, military and first responders as well as the entertainment industry and performance groups.

According to a creditor in the Chapter 11 filing, the carrier came under pressure after "a series of cancelled contracts”.

These included contracts "from football to entertainment" prompting a "collapse in revenue”, says the creditor. “I don’t think people realise how serious the coronavirus is for these previously great little airlines.”

Another source says the suspension of the remainder of the NBA's season also impacted the carrier, which held contracts with various teams. 

Overrun

Last year the carrier made headlines after a runway overrun in Jacksonville. The 737-800 had travelled to Florida from the Leeward Point Field naval station in Guantanamo Bay, Cuba.

Aviation insurers absorbed a loss of about $51 million due to the incident. 

A portion of the airline account was underwritten in the USA, with London markets including Beazley, Brit and Travelers understood to be on the risk, Airfinance Journal's sister publication The Insurance Insider revealed. The insurance policy set to pay out was brokered by Marsh.

Market sources said the aircraft had a hull value of about $31 million, but that the final quantum was higher because new engines had been fitted to the jet.

The charter flight was being operated on behalf of the US military.

The 737-800 aircraft crashed into the St Johns river after exiting a runway at Jacksonville naval station. The 2001-vintage aircraft was managed by Avolon, according to Airfinance Journal's Fleet Tracker. It was part of the $768 million SAPA 2018-1 ABS transaction that closed in March 2018.

No passengers sustained serious injuries in the crash, which resulted in a total loss of the aircraft. 

The National Transportation Safety Board's preliminary report into the 3 May overrun did not indicate what caused the incident.