Air ambulance provider Air Methods has filed for Chapter 11 bankruptcy protection, calling the decision a strategic move to position it for long-term success.
Air Methods currently operates 365 aircraft—mainly helicopters—from 275 bases in 47 states. Under terms of the pre-packaged bankruptcy filing yesterday with the U.S. Bankruptcy Court for the Southern District of Texas, Air Methods will wipe out $1.7 billion in debt. It will also increase its liquidity with $80 million of debtor-in-possession financing from the first lien lenders who are party to the restructuring support agreement (RSA) that is part of the bankruptcy filing.
In return, those debtors are expected to receive a substantial portion of the company’s equity. Air Methods was acquired by private equity firm American Securities for $2.5 billion in 2017, when it operated from more than 300 bases. In its bankruptcy filing, it listed liabilities estimated at between $1 billion and $10 billion.
The filing covers most Air Methods entities, including MRO United Rotorcraft. Other entities covered by the filing include Air Methods Corporation, ASP AMC Holdings Inc., ASP AMC Intermediate Holdings Inc., Air Methods Telemedicine LLC, Mercy Air Service Inc., LifeNet Inc., Rocky Mountain Holdings LLC, Air Methods Tours Inc., Tri-State Care Flight LLC, Advantage LLC, Enchantment Aviation Inc., Native Air Services Inc., Native American Air Ambulance Inc., AirMD LLC (1368), and Midwest Corporate Air Care LLC.
Air Methods stressed in a statement issued after the filing that vendors, suppliers, and employees would be paid in full and without interruption during the bankruptcy process—which it expected to complete by the end of the year—and that all of its subsidiary companies would continue normal operations. The filing and its terms, according to Air Methods, had the support of the “majorities of its first lien lenders and bondholders.” Air Methods’ bonds had recently been downgraded by Moody’s to Caa3 or “junk” status and were trading for as little as five cents on the dollar prior to the filing.
Air Methods CEO JaeLynn Williams said the bankruptcy filing, coupled with recent performance improvements, would allow the company to continue to provide “the highest level of service and patient care.”
“Over the past year, we have made meaningful progress optimizing our field operations, going in-network with leading commercial [health] insurers, and improving our cost structure. We’ve also seen record numbers of transports, and we’ve opened several new bases across the country this year as there is a great demand for air medical services,” Williams said.
Williams received the 2023 Women In Tech Trailblazer Award from the Women Tech Council on October 11 for her "professional achievements" and "business leadership,"
While Air Methods has a good overall safety record, it has had several high-profile fatal crashes in recent years. A 2015 crash near Frisco, Colorado, of an Air Methods Airbus AStar triggered a $100 million civil settlement paid by the company and the OEM to a surviving crewmember with severe burns. In 2018, another Air Methods AStar crashed in northern Wisconsin, killing all three crew aboard, after the pilot apparently fell asleep (according to video evidence). In April of this year, two of three crew members aboard an Air Methods-operated Airbus EC130T2 were killed when the helicopter crashed during an attempted scene pickup.
In 2020, it settled a class-action claim by its California crewmembers that they were illegally denied overtime pay for $78 million, or more than $100,000 each. Also that year, Air Methods agreed to pay an $825,000 civil penalty for operating a helicopter with severely corroded pitot tubes in Florida.