Source: http://www.getfilings.com/sec-filings/140814/GREAT-LAKES-AVIATION-LTD_10-Q/
Timestamp: 2019-09-19 04:09:26
Document Index: 26722052

Matched Legal Cases: ['art 117', 'art 117', 'art 121', 'art 135', 'art 121', 'art 121']

GREAT LAKES AVIATION LTD - FORM 10-Q - August 14, 2014
EX-32.1 - EX-32.1 - GREAT LAKES AVIATION LTD d772099dex321.htm
EX-31.2 - EX-31.2 - GREAT LAKES AVIATION LTD d772099dex312.htm
EX-31.1 - EX-31.1 - GREAT LAKES AVIATION LTD d772099dex311.htm
EX-32.2 - EX-32.2 - GREAT LAKES AVIATION LTD d772099dex322.htm
Registrant’s telephone number, including area code: (307) 432-7000
As of August 9, 2014, 8,974,990 shares of Common Stock of the registrant were issued and outstanding.
$ 3,181,122 $ 6,597,927
5,381,318 7,118,868
7,635,311 8,667,751
2,545,530 3,154,713
1,457,049 1,457,049
20,200,330 26,996,308
125,372,402 125,027,613
10,678,845 10,604,094
(90,114,529 ) (87,029,483 )
45,936,718 48,602,224
1,827,727 2,279,968
$ 67,964,775 $ 77,878,500
$ 24,221,333 $ 24,173,333
3,111,292 3,684,161
3,410,549 3,525,843
30,743,174 31,383,337
4,483,483 7,877,096
35,226,657 39,260,433
1,153,759 7,033,708
32,738,118 38,618,067
$ 8,135,165 $ 16,141,017 $ 15,060,195 $ 31,375,761
6,686,839 14,401,325 12,845,059 28,551,362
36,807 81,732 83,265 188,285
14,858,811 30,624,074 27,988,519 60,115,408
5,012,238 8,201,511 11,035,800 17,010,083
4,114,099 9,234,155 8,483,345 19,228,500
773,725 4,001,873 2,624,334 7,251,432
1,594,394 1,601,716 3,209,704 3,202,480
1,189,982 1,812,898 2,591,500 3,799,634
3,572,036 4,428,486 7,206,726 9,285,400
16,256,474 29,280,639 35,151,409 59,777,529
(1,397,663 ) 1,343,435 (7,162,890 ) 337,879
Interest expense, net of interest income of $160, $553, $320 and $1,015, respectively
(1,130,434 ) (1,097,947 ) (2,117,303 ) (2,203,238 )
(2,528,097 ) 245,488 (9,280,193 ) (1,865,359 )
938,841 (99,610 ) 3,400,244 752,536
$ (1,589,256 ) $ 145,878 $ (5,879,949 ) $ (1,112,823 )
$ (0.18 ) $ 0.02 $ (0.66 ) $ (0.12 )
8,974,990 8,974,990 8,974,990 8,974,990
$ (5,879,949 ) $ (1,112,823 )
3,209,704 3,202,480
94,224 211,728
353,548 320,669
(3,393,613 ) (955,902 )
1,737,550 (233,193 )
1,032,440 (52,887 )
685,071 (399,679 )
452,241 578,069
(572,869 ) (995,025 )
(115,294 ) 491,926
(2,396,947 ) 1,055,363
(638,422 ) (953,863 )
(1,452,000 ) (1,750,000 )
(429,436 ) —
(381,436 ) (250,000 )
(3,416,805 ) (148,500 )
6,597,927 2,887,634
$ 3,181,122 $ 2,739,134
$ 1,730,209 $ 1,903,346
$ 4,579 $ 67,549
— — — (5,879,949 ) (5,879,949 )
8,974,990 $ 89,750 $ 31,494,609 $ 1,153,759 $ 32,738,118
The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and the instructions to Form 10-Q and Regulation S-X. Accordingly, the accompanying unaudited financial statements contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the financial statements for the respective periods. Interim results are not necessarily indicative of results for a full year. The financial statements should be read in conjunction with the Company’s audited financial statements and notes thereto for the year ended December 31, 2013.
Great Lakes Aviation, Ltd. (Great Lakes, the Company, we or us) is a regional airline operating as an independent carrier and as a code share partner with United Air Lines, Inc. (United or United Airlines) and Frontier Airlines, Inc. (Frontier or Frontier Airlines). Our code share agreements allow our mutual customers to purchase connecting flights through our code share partners and to share other benefits such as baggage transfer and frequent flyer benefits (in certain instances), while the Company maintains its own branding on our planes and ticket counters and our own designator code on all our flights. In addition to our code share agreements and independent branding, the Company has developed electronic ticketing (e-ticket) interline agreements with American Airlines, Delta Airlines, Frontier Airlines, United Airlines and U.S. Airways.
Currently, the Company estimates that approximately 37% of Great Lakes’ passenger traffic utilizes the United code share product line and approximately 24% of Great Lakes’ passenger traffic utilizes the Frontier code share product line.
The Company has been informed by Frontier that as part of Frontier’s transformation to an ultra-low cost carrier, that their business model, and subsequent change to a new reservation platform, will no longer allow for interline agreements with any other carriers. As a result, effective October 1, 2014, the Company’s code share and interline e-ticketing agreements with Frontier will be terminated.
The Company provides charter air services to private individuals, corporations, and athletic teams. The Company also carries cargo on most of the Company’s scheduled flights.
Approximately 46% and 48% of the Company’s total revenue during each of the six months ended June 30, 2014 and 2013, respectively, were generated by services provided under the Essential Air Service (EAS) program administered by the United States Department of Transportation (DOT). The FAA Modernization and Reform Act of 2012 was enacted into law on February 14, 2012. This legislation provides for the authorization of the Essential Air Service program through September 30, 2015.
As of August 9, 2014, the Company served 30 airports, of which 20 locations receive EAS subsidy, in 9 states with a fleet of six Embraer EMB-120 Brasilia and 28 Beechcraft 1900D regional airliners. The Company currently operates hubs at Denver, CO, Los Angeles, CA, Minneapolis, MN and Phoenix, AZ.
The Company has experienced a shortage of qualified pilots which has caused the Company to curtail operations and reduce capacity. The pilot shortage and its effect on operations are expected to continue until the Company can hire and train enough pilots to reestablish operations in those markets in which the Company was forced to suspend service. The curtailment of operations has had a negative impact on revenue, operating income and operating cash flows which is expected to continue. Due to this negative impact on revenue, operating income and operating cash flows, the Company does not expect to be in compliance with the debt to earnings coverage covenant in its credit agreement. Until the Company is able to re-staff a sufficient number of qualified pilots to restore service to suspended markets, it expects that it will not have sufficient liquidity to service its existing debt obligations.
The above circumstances and near term projections of significant net losses and negative operating cash flows in combination with the expectation the Company will not be in compliance with the terms of the senior credit facility, and the lender’s ability to call our debt, raise substantial doubt about the Company’s ability to continue as a going concern. Our financial statements are prepared on a going concern basis in accordance with United States generally accepted accounting principles and do not include any adjustments that might result from the outcome of this uncertainty. The going concern basis of presentation assumes that we will continue in operation for the next twelve months and will be able to realize our assets and discharge our liabilities and commitments in the normal course of business. Our credit facility matures on November 16, 2015. As a result of not being in compliance under our senior credit facility and the expectation the Company will not be in compliance with the terms of the senior credit facility throughout 2014, all borrowings (approximately $24.2 million) under our senior credit facility are classified as current maturities as of June 30, 2014. Our operating and capital plans for the next twelve months call for dedication of substantially all of our excess cash flow to the repayment of indebtedness.
Effective May 30, 2014, the Company entered into the Fourth Amendment and Second Forbearance to Credit Agreement (the “Forbearance Agreement”) with its lenders Crystal Financial LLC and GB Merchant Partners, LLC (the “Lenders”). The Forbearance Termination Date is on the earliest of (i) September 15, 2014 and (ii) the date on which Great Lakes commits additional breaches under the Credit Agreement. In consideration of entering into the Forbearance Agreement, the Lenders have agreed to lend the Company up to an additional $3 million under our term loan and defer an additional $2 million of amortization payments until maturity of the loan, which were due and payable by September 30, 2014.
To meet our capital needs, we are considering several alternatives, including, but not limited to, additional equity financings, debt financings, and other funding transactions, including the sale or sale-leaseback of certain aircraft. Also, as announced on June 30, 2014, the Company engaged Raymond James as its investment banker with respect to new financing options and strategic alternatives. There can be, however, no assurance that we will be able to complete any such transaction on acceptable terms or otherwise.
For the three month periods ended June 30, 2014 and June 30, 2013 there were no options or other potentially dilutive securities outstanding.
Accrued liabilities consisted of the following balances at June 30, 2014 and December 31, 2013:
1,420,017 1,221,257
56,254 —
297,929 74,962
307,460 286,701
1,328,889 1,942,923
$ 3,410,549 $ 3,525,843
The following table sets forth, as of June 30, 2014 and December 31, 2013, the carrying amount of the Company’s long-term debt and current maturities of long term debt. The carrying amount of the debt consists of the principal payments contractually required under the debt agreements:
GB/Crystal Term Loan—principal
$ 15,700,000 $ 15,200,000
GB/Crystal Revolving Loan- principal
8,521,333 8,973,333
24,221,333 24,173,333
GB/Crystal Term Loan—principal (1)
(24,221,333 ) (24,173,333 )
(1) All debt is classified as current as a result of not being in compliance with our credit agreement and the lender’s ability to call our debt upon expiration of the current forbearance agreement.
On November 16, 2011, the Company entered into a new financing agreement (the “Credit Agreement”) with GB Merchant Partners, LLC, serving as Collateral Agent, and Crystal Capital LLC, serving as Administrative Agent. Terms of the financing include a four-year term loan in the amount of $24 million and a revolving loan credit facility in which the Company may borrow up to $10 million. Pursuant to the terms of a pledge and security agreement and an aircraft security agreement, the Company’s obligations to the lenders identified in the Credit Agreement are secured by substantially all assets of the Company, including all owned aircraft. The term loan bears interest at a floating rate of 30 day LIBOR rate plus 11% with a minimum rate of 15.5%. Voluntary prepayments of the term loan are subject to prepayment penalties ranging from 4% prior to the first anniversary of the loan and declining in increments of 1% at each anniversary of the loan thereafter. As of June 30, 2014, $15.7 million was outstanding under the term loan. In addition to the scheduled contractual principal and interest obligations, the Company is required to make principal payments, based on a percentage of excess cash flows (as defined in the Credit Agreement), as measured on September 30 of each year beginning September 30, 2012. The Company is required to prepay an amount equal to 50% of such excess cash flow for the nine–month period ending September 30, 2012, and for each subsequent twelve-month period thereafter. The excess cash flow payments are to be applied to reduce the outstanding principal balance of the term loan. The Company made an excess cash flow payment on November 14, 2012, in the amount of $2.3 million.
The term loan is set to mature on November 16, 2015 at which time the outstanding principal balance due is scheduled to be $9.8 million.
As of June 30, 2014, $8.5 million was outstanding under the revolving credit facility, secured by accounts receivable, parts inventory and spare engines. The revolving credit facility bears interest at the rate of 30 day LIBOR rate plus 8.0% with a minimum interest rate of 10.5%. The revolving loan credit facility is set to mature on November 16, 2015 at which time any outstanding principal balance will be due. The Company was also required to pay a closing fee based on the initial facility commitment, and is required to pay a monthly unused line fee, a specified fee for certain prepayments of the term loan, and certain administrative and fronting fees related to the Credit Agreement.
As of June 30, 2014 the Company was not in compliance with the leverage coverage ratio financial covenant contained in the Company’s senior credit facility’s Credit Agreement. Specifically the Company was required to maintain a leverage ratio, calculated by dividing average quarterly borrowings by trailing 12 month earnings before interest, taxes, depreciation and amortization (EBITDA), as defined by the Credit Agreement, of 2.25:1 or less. At June 30, 2014, the Company’s leverage ratio was calculated to be 4.27:1, which was not in compliance with the terms of the Credit Agreement. Furthermore, the Company does not expect to be in compliance with its leverage
ratio covenants throughout the balance of 2014 as EBITDA is calculated on a trailing 12-month basis. At March 31, 2014 the Company did not submit its audited annual report to its lenders within the prescribed timeframe required by the terms of the Credit Agreement. Furthermore, the auditor’s report over the Company’s financial statements for the fiscal year ended December 31, 2013 contained an explanatory paragraph referencing substantial doubt about the Company’s ability to continue as a going concern. These are both covenant violations that, absent a forbearance, permit the Company’s lenders to exercise their right to declare our debt obligations to be immediately due and payable under the terms of the Credit Agreement. As a result of not being in compliance with the terms of the Company’s senior credit facility and the expectation the company will not be in compliance with the terms of the senior credit facility upon expiration of the forbearance and throughout the remainder of 2014, all borrowings (approximately $24.2 million) under the Company’s senior credit facility are classified as current maturities as of June 30, 2014.
On April 1, 2014 the Company and its Lenders have entered into a Third Amendment and Forbearance Agreement which terminated on April 30, 2014. As part of this agreement we agreed to a 2% increase in the applicable rate that we are paying on our loan agreements. The interest rate on our revolving credit facility will increase to the greater of 30 day LIBOR plus 10% or 12.5%. The interest rate on our term loan will increase to the greater of 30 day LIBOR plus 13% or 17.5%. The Company is in negotiations with its lenders on extending the term of the Forbearance Agreement.
Effective May 30, 2014, the Company entered into the Fourth Amendment and Second Forbearance to Credit Agreement (the “Forbearance Agreement”) with its Lenders. Pursuant to the Forbearance Agreement, the Lenders have agreed to temporarily forbear from exercising certain rights and remedies under the Credit Agreement. The Forbearance Termination Date is on the earliest of (i) September 15, 2014 and (ii) the date on which Great Lakes commits additional breaches under the Credit Agreement. In consideration of entering into the Forbearance Agreement, the Lenders have agreed to lend the Company up to an additional $3.0 million under our term loan and defer an additional $2.0 million of amortization payments until maturity of the loan, which were due and payable by September 30, 2014. As of July 30, 2014 the Company has borrowed an additional $2.0 million under the terms of the Forbearance Agreement and deferred a $1.0 million amortization payment that, absent the forbearance, would have been payable on June 30, 2014. The Company also agreed to pay a forbearance fee of $242,000, a funding fee of $60,000, and a commitment fee of $60,000.
The Company rents two six-passenger aircraft and a vehicle from Iowa Great Lakes Flyers, Inc., a corporation solely owned by Douglas G. Voss, the Company’s Chairman and major stockholder. Total payments for these leases were $14,250 for each of the six months ending June 30, 2014 and 2013, respectively. As of June 30, 2014, Mr. Voss controlled 4,160,247 shares of common stock of the Company, representing approximately 46.4% of the Company’s outstanding common stock.
The Company’s annual effective income tax rate is estimated to be 36.6% for 2014. The Company’s effective tax rate includes non-deductible permanent tax differences. Prior to 2004, the Company reported significant cumulative losses and generated substantial net operating loss carryforwards. From 2007 through 2013, the Company utilized a portion of these carryforwards to offset taxable income.
Federal net operating loss carryforwards begin to expire in year 2021. The Company believes it is more likely than not that it will realize the benefit of the deductible temporary differences and these net operating loss carryforwards prior to expiration.
Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; and other inputs that are observable or can be corroborated by observable market data.
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. We use valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs when determining fair value and then we rank the estimated values based on the reliability of the inputs used following the fair value hierarchy set forth by the Financial Accounting Standards Board (the “FASB”).
Our financial instruments consist of cash, accounts receivable, accounts payable, accrued liabilities and long-term debt including the current portion. The carrying values of cash, accounts receivable, accounts payable and accrued liabilities approximate their fair values. These are considered Level 1 measurements. The carrying value of our long term debt including the current portion reflects original cost net of unamortized deferred debt restructuring gain and was $24.2 million and $24.2 million as of June 30, 2014 and December 31, 2013, respectively. For additional information, see Note 4 Long-Term Debt.
All of the Company’s debt is comprised of variable rate debt (see Note 4). Because there is not an active market for the Company’s notes, and the Company is unable to determine an appropriate discount rate to use in estimating the fair value of this obligation or the probability of early redemption, it is not practical to estimate the fair value of the debt.
We have been informed by Frontier that as part of Frontier’s transformation to an ultra-low cost carrier, that their business model, and subsequent change to a new reservation platform, will no longer provide for interline agreements with any other carriers. As a result, effective October 1, 2014, the Company’s code share and interline e-ticketing agreements with Frontier will be terminated. We estimate that approximately 24% of our ticket sales are generated by the Frontier code share and interline e-ticketing sales channels. These ticket sales represented approximately 11% of our total revenue for the six-month period ending June 30, 2014.
Whereas we cannot currently quantify the effect of the termination of the Frontier code share and interline e-ticketing agreements, it is our belief that the majority of the Frontier passengers will migrate to other sales channels provided by Great Lakes if they intend on using air transportation to reach their final destination. Our belief is largely predicated on the fact that we are the only scheduled airline serving our current destinations. Alternatively, these passengers would utilize ground transportation or cancel their travel.
As of August 9, 2014, we served 30 airports in nine states with a fleet of six Embraer EMB-120 Brasilias and 28 Beech 1900D regional airliners.
As of June 30, 2014 the Company was not in compliance with the leverage coverage ratio financial covenant contained in the Company’s senior credit facility’s Credit Agreement. As a consequence the Company’s lenders have the right to declare our debt obligations of approximately $24.2 million to be immediately due and payable under the terms of the Credit Agreement. Effective May 30, 2014, the Company entered into the Fourth Amendment and Second Forbearance to Credit Agreement (the “Forbearance Agreement”) with its Lenders. Pursuant to the Forbearance Agreement, the Lenders have agreed to temporarily forbear from exercising certain rights and remedies under the Credit Agreement. The Forbearance Termination Date is on the earliest of (i) September 15, 2014 and (ii) the date on which Great Lakes commits additional breaches under the Credit Agreement. In consideration of entering into the Forbearance Agreement, the Lenders have agreed to lend the Company up to an additional $3.0 million under our term loan and defer an additional $2.0 million of amortization payments until maturity of the loan, which were due and payable by September 30, 2014. As of July 30, 2014 the Company has borrowed an additional $2.0 million under the terms of the Forbearance Agreement and deferred a $1.0 million amortization payment payable on June 30, 2014. The Company also agreed to pay a forbearance fee of $242,000, a funding fee of $60,000, and a commitment fee of $60,000.
Essential Air Service (“EAS”) Program
In the six months ended June 30, 2014, we derived approximately 46% of our total revenue from the EAS program which is administered by the United States Department of Transportation (DOT). The EAS program was instituted under the Airline Deregulation Act of 1978 (the “Deregulation Act”), which allowed airlines greater freedom to introduce, increase, and generally reduce or eliminate service to existing markets. Under the EAS program, certain communities are guaranteed specified levels of “essential air service.” In order to promote the provision of essential air services, the DOT may authorize the payment of federal subsidies to compensate an air carrier that is providing essential air services in otherwise unprofitable or minimally profitable markets.
As of August 9, 2014, we served 20 EAS communities on a subsidized basis.
New Federal Aviation Administration (“FAA”), pilot qualification rules imposed as part of the Airline Safety and Federal Aviation Administration Extension Act of 2010 in combination with revised FAR Part 117 Flight Crewmember Flight and Duty Limitations and Rest Requirements, (“FAR Part 117”), have created an industry-wide shortage of qualified pilots and negatively affected our operations and financial condition.
The Airline Safety and Federal Aviation Administration Extension Act of 2010 was enacted in August 2010. Among many other pilot training directives, the legislation mandated that first officers (co-pilots) obtain an Airline Transport Pilot certification (“ATP”) prior to being qualified to perform crewmember duties in scheduled airline passenger service under FAR Part 121 regulatory requirements. A key factor to enable a pilot to receive an ATP certificate is the accumulation of 1,500 flight hours.
Furthermore, the legislation directed the FAA Administrator to conduct a rule making proceeding, to identify specific academic training courses that would provide for exemptions to the 1,500 hour requirement. The FAA published the final rule in the Federal Register on July 15, 2013. These rules became effective August 1, 2013. As a result of the rule making process, first officers may be eligible to receive a “restricted privileges” ATP with a minimum of 750 hours if they were a military pilot, 1,000 hours if they have received a bachelor’s degree from an accredited educational institution with an aviation major and 1,250 hours if they have received an associate’s degree from an accredited educational institution with an aviation major. It should be noted that accredited educational institutions provide very limited actual flight experience and that graduates from these institutions typically will have received between 250 to 350 hours of actual flight time.
On March 18, 2014, the Company received from the FAA new operations specifications allowing the Company to hire pilots under FAR Part 135 regulatory requirements. This will allow us to restore first officer staffing levels while maintaining FAR Part 121 hiring, training and employment standards as we have always done as a Part 121 carrier. From February 2014 thru June 2014 we have hired 69 new pilots. Of the 69 new hire pilots, 49 have completed training and are operating in revenue generating scheduled air service.
EAS Program Activity Subsequent to January 1, 2014
In addition to the EAS subsidized cities above, in March of 2014, the Company terminated service to Dickinson and Williston, ND which were not EAS subsidized cities.
We had operating revenue of $28.0 million for the six-month period ending June 30, 2014, a 53.45% decrease compared to operating revenue of $60.1 million for the six-month period ending June 30, 2013. We realized an $16.3 million decrease in passenger revenue and public service revenue decreased $15.7 million compared to the prior year period. The $16.3 million or 52.0% period-over-period decrease in passenger revenues and the $15.7 million or 55.0% was primarily attributable to a reduction of scheduled service primarily attributable to a 62.1% reduction in number of pilots created by the industry-wide shortage of qualified pilots. This shortage of qualified pilots, resulted in a 61.6% decrease in available seat miles and 59.5% decrease in departures which resulted in 55.9% decrease in revenue passengers carried. Available seat miles have decreased 61.6% due to the decreased departures as well as due to the reconfiguration of certain aircraft with fewer seats.
We had an operating loss of $7.2 million for the six-month period ending June 30, 2014, compared to operating income of $0.3 million for the six-month period ending June 30, 2013. The $7.5 million decrease in operating income is attributable to a $32.1 million decrease in operating revenue, partially offset by a $24.6 million decrease in operating expenses. We realized a net loss of $5.9 million for the six-month period ending June 30, 2014, compared to net loss of $1.1 million for the six-month period ending June 30, 2013. The increase in net loss is primarily a result of a $32.1 million decrease in operating revenue partially offset by a $24.6 million decrease in operating expenses, a $0.1 million decrease in interest expense and a $2.5 million increase in income tax benefit.
The following table sets forth certain financial information regarding our results of operations for the three months ended June 30, 2014 and 2013.
$ 8,135 27.5 ¢ (49.6 )% $ 16,141 17.9 ¢
6,687 22.6 (53.6 ) 14,401 16.0
37 0.1 (54.9 ) 82 0.1
14,859 50.3 (51.5 ) 30,624 34.0
5,012 17.0 (38.9 ) 8,202 9.1
4,114 13.9 (55.4 ) 9,234 10.3
774 2.6 (80.7 ) 4,002 4.4
1,594 5.4 (0.5 ) 1,602 1.8
1,190 4.0 (34.4 ) 1,813 2.0
3,572 12.1 (19.3 ) 4,428 4.9
16,256 55.0 (44.5 ) 29,281 32.5
(1,397 ) (4.7 ) (204.0 ) 1,343 1.5
(1,130 ) (3.8 ) 2.9 (1,098 ) (1.2 )
(2,527 ) (8.5 )¢ (1,131.4 )% 245 0.3 ¢
939 3.2 (1,048.5 ) (99 ) (0.1 )
$ (1,588 ) (5.4 )¢ (1,187.7 )% $ 146 0.2 ¢
The following table sets forth certain selected operating data regarding our operations for the three months ended June 30, 2014 and 2013.
from 2013 June 30,
29,569 -67.1 % 89,978
13,703 -61.6 % 35,721
47,697 -61.2 % 122,829
7,633 -59.5 % 18,828
46.3 % 16.6 % 39.7 %
59.4 ¢ 31.4 % 45.2 ¢
50.3 ¢ 47.9 % 34.0 ¢
55.0 ¢ 69.2 % 32.5 ¢
$ 134.14 2.1 % $ 131.41
287 -1.4 % 291
$ 3.60 1.7 % $ 3.54
(1) “Available seat miles” or “ASMs” represent the number of seats available for passengers in scheduled flights multiplied by the number of scheduled miles those seats are flown.
(2) “Revenue passenger miles” or “RPMs” represent the number of miles flown by revenue passengers.
(3) “Passenger load factor” represents the percentage of seats filled by revenue passengers and is calculated by dividing revenue passenger miles by available seat miles.
(4) “Average yield per revenue passenger mile” represents the average passenger revenue received for each mile a revenue passenger is carried.
(5) “Revenue per available seat mile” represents the average total operating revenue received for each available seat mile.
(6) “Cost per available seat mile” represents operating expenses divided by available seat miles.
(7) “Average passenger fare” represents passenger revenue divided by the number of revenue passengers carried. For the three month period ending June 30, 2014, passenger revenue of $8.1 million included nonrecurring passenger revenue of $1.7 million. This nonrecurring passenger revenue was excluded from the calculation of average passenger fare.
(8) “Average passenger trip length” represents revenue passenger miles divided by the number of revenue passengers carried.
Comparison of Second Quarter 2014 to Second Quarter 2013
Passenger Revenues. Passenger revenues were $8.1 million in the second quarter of 2014, a decrease of 49.6% from $16.1 million in the second quarter of 2013. The $8.0 million quarter-over-quarter decrease in passenger revenues was attributable to the curtailment of operations due to a severe shortage of available qualified pilots in combination with a reduction of scheduled service in markets that were experiencing diminishing year-over-year load factors and lower revenue passenger mile (RPM) yields. In the second quarter of 2014, passenger revenue of $8.1 million included nonrecurring passenger revenue of $1.7 million related nonrecurring amounts collected from another carrier. These amounts resulted from a reconciliation of the passenger revenues generated by our proration formulas with this carrier.
Public Service Revenues. Public service revenues collected through the EAS Program decreased 53.6% to $6.7 million during the second quarter of 2014, as compared to $14.4 million during the second quarter of 2013. The decrease in public service revenue was mostly due a 59.5% decrease in departures due to the industry-wide shortage of qualified pilots. At June 30, 2014 and June 30, 2013, we served 20 and 32 communities, respectively, on a subsidized basis under the EAS Program.
Other Revenues. Other revenues declined 54.9%, mainly due to decline of cargo revenues resulting from 59.5% decline in departures during the second quarter of 2014 compared to the second quarter of 2013.
Operating Expenses. Total operating expenses were $16.3 million, or 55.0 cents per ASM, in the second quarter of 2014, as compared to $29.3 million, or 32.5 cents per ASM in the second quarter of 2013.
Salaries, Wages, and Benefits. Salaries, wages, and benefits were $5.0 million in the second quarter of 2014, a decrease of 38.9% from $8.2 million in the second quarter of 2013. The decrease in salaries, wages, and benefits was mostly attributable to the decreased number of employees as a result of the decreased operations due to the industry-wide shortage of qualified pilots.
Aircraft Fuel Expense. Aircraft fuel and into-plane expense was $4.1 million, or 13.9 cents per ASM, in the second quarter of 2014. In comparison, our aircraft fuel and into-plane expense for the second quarter of 2013 was $9.2 million, or 10.3 cents per ASM. The 55.4% decrease in our aircraft fuel expense was attributable to a reduction in fuel consumption which was the result of a 67.1% decrease in ASMs.
The average cost of fuel increased from $3.54 per gallon in the second quarter of 2013 to $3.60 per gallon in the second quarter of 2014. At second quarter 2014 rates of consumption, a one-cent increase or decrease in the price per gallon of fuel will increase or decrease our fuel expense by approximately $46,000 annually.
Aircraft Maintenance, Materials, and Component Repairs. Aircraft maintenance, materials, and component repairs expense was $0.8 million during the second quarter of 2014, which was a 80.7% decrease from $4.0 million during the second quarter of 2013. The decrease was primarily attributable to the reduction of component repairs and the timing of engine overhaul expenses resulting from the reduced operations.
Depreciation and amortization. Depreciation and amortization expense was $1.6 million during the second quarter of 2014 which was consistent with $1.6 million in the second quarter of 2013.
Other Rentals and Landing Fees Expense. Other rentals and landing fees decreased by $0.6 million from $1.8 million during the second quarter of 2013 to $1.2 million during the second quarter of 2014. The decrease was mainly attributable to decreased landing fees resulting from the 59.5% reduction in departures along with reduced hub rental expense.
Other Operating Expenses. Other operating expenses were $3.6 million, or 12.1 cents per ASM during the second quarter of 2014, which was a decrease from $4.4 million, or 4.9 cents per ASM during the second quarter of 2013. The decrease was mainly attributable to decreases in passenger related expenses of $462,000, pilot related expenses of $372,000, deicing expenses of $164,000, insurance expense of $140,000, other expenses of $130,000 and employee related expenses $75,000. These were partially offset by increased legal and professional fees of $487,000.
Interest Expense. We incurred interest expense of $1.1 million in the second quarter of 2014, which was consistent with $1.1 million in the second quarter of 2013.
Income Tax Expense. For the three months ended June 30, 2014, we recorded an income tax benefit of $0.9 million and for the three months ended June 30, 2013, we recorded an income tax expense of $0.1 million. Our estimated effective federal and state income tax rate is 36.6% for the three months ended June 30, 2014.
The following table sets forth certain financial information regarding our results of operations for the six months ended June 30, 2013 and 2012.
$ 15,060 21.7 ¢ (52.0 )% $ 31,376 17.4 ¢
12,845 18.5 (55.0 ) 28,551 15.8
83 0.1 (55.9 ) 188 0.1
27,988 40.4 (53.4 ) 60,115 33.4
11,036 15.9 (35.1 ) 17,010 9.4
8,483 12.2 (55.9 ) 19,229 10.7
2,624 3.8 (63.8 ) 7,251 4.0
3,210 4.6 0.2 3,202 1.8
2,591 3.7 (31.8 ) 3,800 2.1
7,207 10.4 (22.4 ) 9,285 5.2
35,151 50.7 (41.2 ) 59,777 33.2
(7,163 ) (10.3 ) (2,219.2 ) 338 0.2
(2,117 ) (3.1 ) (3.9 ) (2,203 ) (1.2 )
(9,280 ) (13.4 )¢ 397.6 % (1,865 ) (1.0 )¢
3,400 4.9 352.1 752 0.4
$ (5,880 ) (8.5 )¢ 428.3 % $ (1,113 ) (0.6 )¢
The following table sets forth certain selected operating data regarding our operations for the six months ended June 30, 2014 and 2013.
69,291 -61.6 % 180,233
30,107 -55.9 % 68,257
104,728 -55.1 % 233,066
15,413 -59.5 % 38,083
43.5 % 14.8 % 37.9 %
50.0 ¢ 8.7 % 46.0 ¢
40.4 ¢ 21.0 % 33.4 ¢
50.7 ¢ 52.7 % 33.2 ¢
$ 127.21 -5.5 % $ 134.62
287 -2.0 % 293
$ 3.67 -0.3 % $ 3.68
(7) “Average passenger fare” represents passenger revenue divided by the number of revenue passengers carried. For the six month period ending June 30, 2014, passenger revenue of $15.1 million included nonrecurring passenger revenue of $1.7 million. This nonrecurring passenger revenue was excluded from the calculation of average passenger fare.
Comparison of First Six Months 2014 to First Six Months 2013
Passenger Revenues. Passenger revenues were $15.1 million in the first six months of 2014, a decrease of 52.0% from $31.4 million in the first six months of 2013. The $16.3 million period-over-period decrease in passenger revenues was attributable to the curtailment of operations due to a severe shortage of available qualified pilots in combination with a reduction of scheduled service in markets that were experiencing diminishing year-over-year load factors and lower revenue passenger mile (RPM) yields. In the second quarter of 2014, passenger revenue of $8.1 million included nonrecurring passenger revenue of $1.7 million related nonrecurring amounts collected from another carrier. These amounts resulted from a reconciliation of the passenger revenues generated by our proration formulas with this carrier.
Public Service Revenues. Public service revenues collected through the EAS Program decreased 55.0% to $12.8 million during the first six months of 2014, as compared to $28.6 million during the first six months of 2013. The decrease in public service revenue was mostly due a 59.5% decrease in departures due to the industry-wide shortage of qualified pilots. At June 30, 2014 and June 30, 2013, we served 20 and 32 communities, respectively, on a subsidized basis under the EAS Program.
Other Revenues. Other revenues declined 55.9%, mainly due to decline of cargo revenues resulting from a decrease in markets we serve and a 59.5% decline in departures during the first six months of 2014 compared to the first six months of 2013.
Operating Expenses. Total operating expenses were $35.2 million, or 50.7 cents per ASM, in the first six months of 2014, as compared to $59.8 million, or 33.2 cents per ASM in the first six months of 2013.
Salaries, Wages, and Benefits. Salaries, wages, and benefits were $11.0 million in the first six months of 2014, a decrease of 35.1% from $17.0 million in the first six months of 2013. The decrease in salaries, wages, and benefits was mostly attributable to the decreased number of employees as a result of the decreased operations due to the industry-wide shortage of qualified pilots.
Aircraft Fuel Expense. Aircraft fuel and into-plane expense was $8.5 million, or 12.2 cents per ASM, in the first six months of 2014. In comparison, our aircraft fuel and into-plane expense for the first six months of 2013 was $19.2 million, or 10.7 cents per ASM. The 55.9% decrease in our aircraft fuel expense was attributable to a reduction in fuel consumption which was the result of a 61.6% decrease in ASMs.
The average cost of fuel decreased from $3.68 per gallon in the first six months of 2013 to $3.67 per gallon in the first six months of 2014. At first six months of 2014 rates of consumption, a one-cent increase or decrease in the price per gallon of fuel will increase or decrease our fuel expense by approximately $46,000 annually.
Aircraft Maintenance, Materials, and Component Repairs. Aircraft maintenance, materials, and component repairs expense was $2.6 million during the first six months of 2014, which was a 63.8% decrease from $7.3 million during the first six months of 2013. The decrease was primarily attributable to the reduction of component repairs and the timing of engine overhaul expenses resulting from the reduced operations.
Depreciation and amortization. Depreciation and amortization expense was $3.2 million during the first six months of 2014 which was consistent with $3.2 million in the first six months of 2013.
Other Rentals and Landing Fees Expense. Other rentals and landing fees decreased by $1.2 million from $3.8 million during the first six months of 2013 to $2.6 million during the first six months of 2014. The decrease was mainly attributable to decreased landing fees resulting from the 59.5% reduction in departures along with reduced hub rental expense.
Other Operating Expenses. Other operating expenses were $7.2 million, or 10.4 cents per ASM during the first six months of 2014, which was a decrease from $9.3 million, or 5.2 cents per ASM during the first six months of 2013. The decrease was mainly attributable to decreases in pilot related expenses of $943,000, passenger related expenses of $597,000, deicing expenses of $479,000, insurance expense of $291,000, other expenses of $153,000, employee expenses of $126,000 and utilities of $77,000. These were partially offset by increased legal and professional fees of $587,000.
Interest Expense. We incurred interest expense of $2.1 million in the first six months of 2014, compared to $2.2 million in the first six months of 2013 as a result of our long-term debt.
Income Tax Expense. For the six months ended June 30, 2014, we recorded an income tax benefit of $3.4 million and for the six months ended June 30, 2013, we recorded an income tax benefit of $0.8 million. Our estimated effective federal and state income tax rate is 36.6% for the six months ended June 30, 2014.
As a result of not being in compliance under our senior credit facility and the uncertainty of our liquidity position for the next 12 months, all borrowings (approximately $24.2 million) under our senior credit facility will be callable by the lender upon expiration of the current forbearance agreement and are classified as current maturities as of June 30, 2014. Thus, we had negative working capital of $10.5 million and a current ratio of 0.66:1 at June 30, 2014, compared to negative working capital of $4.4 million and a current ratio of 0.86:1 at December 31, 2013.
We have historically used debt to finance the purchase of aircraft. On November 16, 2011, we entered into a financing agreement with our lenders. Terms of the financing include a four-year term loan in the amount of $24 million and a revolving loan credit facility in which we may borrow up to $10 million.
At June 30, 2014, our outstanding principal balance on the term loan was $15.7 million and we had borrowed $8.5 million under the revolving credit facility.
Pursuant to the terms of a pledge and security agreement and an aircraft security agreement, our obligations to the lenders identified in the Credit Agreement are secured by substantially all assets of the Company, including all owned aircraft.
For the six months ending June 30, 2014, we invested $0.6 million of cash in aircraft, engines, rotable parts and other equipment, mostly represented by rotable parts acquisitions. We do not expect to acquire additional aircraft or engines in the foreseeable future.
At June 30, 2014 the Company has no aircraft lease obligations.
At June 30, 2014, the Company was not in compliance with financial covenants contained in the Credit Agreement, and it is not expected that the Company will be in compliance throughout the balance of 2014. As a result of such non-compliance our lenders have the right to declare all borrowings (approximately $24.2 million) immediately due and payable.
Effective May 30, 2014, the Company entered into the Fourth Amendment and Second Forbearance to Credit Agreement (the “Forbearance Agreement”) with its Lenders. Pursuant to the Forbearance Agreement, the Lenders have agreed to temporarily forbear from exercising certain rights and remedies under the Credit Agreement. The Forbearance Termination Date is on the earliest of (i) September 15, 2014 and (ii) the date on which Great Lakes commits additional breaches under the Credit Agreement. In consideration of entering into the Forbearance Agreement, the Lenders have agreed to lend the Company up to an additional $3.0 million under our term loan and defer until maturity of the loan, an additional $2.0 million of amortization payments which were due and payable by September 30, 2014. As of July 30, 2014 the Company has borrowed an additional $2.0 million under the terms of the Forbearance Agreement and deferred a $1.0 million amortization payment payable on June 30, 2014. The Company also agreed to pay a forbearance fee of $242,000, a funding fee of $60,000, and a commitment fee of $60,000. As of July 30, 2014, an additional $1 million is available for borrowing under the term loan.
Sources and Uses of Cash. As of June 30, 2014, our cash balance was $3.2 million. We made principal payments on term debt of $1.5 million and had additional borrowings on term debt of $1.5 million.
Cash Provided by Operating Activities. During the six months ended June 30, 2014, our cash used by operating activities was $2.8 million. During the six months we generated a net loss of $5.9 million and recorded non-cash depreciation and amortization of $3.2 million and a deferred tax benefit of $3.4 million. Other sources of cash included a reduction in accounts receivable of $1.7 million, a reduction in inventory of $1.0 million and a combined reduction in prepaid expenses, other current assets and other assets of $0.7 million. Uses of cash included $3.4 million of deferred tax benefit, a reduction in accounts payable of $0.6 million and reductions in accrued interest, unearned revenue and other liabilities of $0.1 million.
Cash Flows from Investing Activities. During the first six months of 2014, we invested $0.6 million for the purchase of replacement aircraft rotable components and other property and equipment.
Cash Flows from Financing Activities. During the first six months of 2014, we utilized $1.5 million of cash to reduce our outstanding notes payable and long-term debt balances and borrowed an additional $1.5 million under the terms of the Forbearance Agreement. Proceeds from additional borrowings, net of finance and legal fees, amounted to $1.1 million.
This Quarterly Report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Great Lakes Aviation, Ltd. (Great Lakes, we, our, its, it or the Company) notes that certain statements in this Form 10-Q and elsewhere are forward-looking and provide other than historical information. Our management may also make oral, forward-looking statements from time to time. These forward-looking statements include, among others, statements concerning our general business strategies, financing decisions, and expectations for funding expenditures and operations in the future. The words “may,” “will,” “believe,” “plan,” “continue,”
“could,” “should,” “hope,” “estimate,” “project,” “intend,” “expect,” “anticipate” and similar expressions reflected in such forward-looking statements are based on reasonable assumptions, and none of the forward-looking statements contained in this Form 10-Q or elsewhere should be relied on as predictions of future events. Such statements are necessarily dependent on assumptions, data, or methods that may be incorrect or imprecise, and may be incapable of being realized. The risks and uncertainties that are inherent in these forward-looking statements could cause actual results to differ materially from those expressed in or implied by these statements.
2) our ability to restructure our current debt obligations and covenants and obtain additional sources of capital to provide for operating cash requirements either through additional financings and/or sales of assets;
3) the receipt of profitable levels of passenger revenues on the routes that we serve;
4) the continuation of Essential Air Service and our ability to capitalize on it;
5) the level of regulatory and environmental costs;
6) airline industry and broader economic conditions;
7) the continued connection capacity at our hubs and activities of our code share partners;
8) our ability to monetize our net operating loss carry forwards;
9) the incidence of domestic or international terrorism and military actions;
10) competition from other airlines and ground transportation companies;
11) the volatility of fuel costs;
13) our ability to retain key personnel;
15) the incidence of technological failures or attacks;
16) maintenance costs related to aging aircraft;
17) the limited market for our securities;
18) the volatility of the market price of our common stock;
19) our concentration of stock ownership and control of the company by our Chairman and President;
20) our ability to timely remediate any deficiencies in our internal controls;
21) no expectation of dividend;
22) anti-takeover provisions and other restrictions in our credit agreements.
We are susceptible to certain risks related to changes in the cost of aircraft fuel and changes in interest rates. As of June 30, 2014, we did not have any derivative financial instruments.
Due to the airline industry’s dependency on aircraft fuel for operations, airline operators including Great Lakes are impacted by changes in aircraft fuel prices. Aircraft fuel represented approximately 24.1% of our operating expenses in the six-month period ending June 30, 2014. At rates of consumption for the first six months of 2014, a one cent increase or decrease in the per gallon price of fuel will increase or decrease our fuel expense by approximately $46,000 annually.
Our operations are capital intensive because the vast majority of our assets consist of flight equipment, which is financed primarily with long-term debt. At June 30, 2014, we had approximately $24.2 million of variable rate debt. Effective April 1, 2014, as a result of entering into a Third Amendment and Forbearance Agreement with our lenders, we agreed to a 2% increase in the applicable rate that we are paying on our loan agreements. The interest rate on our revolving credit facility will increase to the greater of 30 day LIBOR plus 10% or 12.5%. The interest rate on our term loan will increase to the greater of 30 day LIBOR plus 13% or 17.5%. Going forward, we could be subject to increased rates of interest on our debt if the 30 day LIBOR rate increases by more than 2.3 percentage points.
During the Company’s most recent fiscal quarter, there has been no change in our internal control over financial reporting (as defined in Rule 13a-15(f) or 15d-15(f) under the Securities Exchange Act) that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
During the period covered by this Quarterly Report on Form 10-Q, there were no material developments in any legal proceedings previously reported in our Annual Report on Form 10-K for the year ended December 31, 2013.
We are not in compliance with financial covenants under our senior credit facility with our Lenders.
As of June 30, 2014, the Company was not in compliance with financial covenants contained in the Credit Agreement. Furthermore, the Company does not expect to be in compliance with the leverage ratio covenant throughout the balance of 2014. Further, at March 31, 2014, the Company had not submitted its audited annual report to its lenders within the timeframe required by the Credit Agreement. Furthermore, the auditor’s report over the Company’s financial statements for the fiscal year ended December 31, 2013 contained an explanatory paragraph referencing substantial doubt about the Company’s ability to continue as a going concern. These are covenant violations that permit the Company’s lenders to exercise their right to declare our debt obligations to be immediately due and payable under the terms of the Credit Agreement. As a result, of not being in compliance with the terms of the Company’s senior credit facility and the expectation that the Company will not be in compliance with the terms of the senior credit facility throughout 2014, all borrowings (approximately $24.2 million) under the Company’s senior credit facility are classified as current maturities as of December 31, 2013.
On April 1, 2014, the Company and its Lenders entered into a Third Amendment and Forbearance Agreement which terminated on April 30, 2014. Under the terms of this agreement the Company’s lenders agreed to refrain from exercising their right to declare the obligations to be immediately due and payable under the terms of the Credit Agreement. On March 31, 2014, the Company also made its regularly scheduled debt payment to the lenders in the amount of $1 million. Effective May 30, 2014, the Company entered into the Fourth Amendment and Second Forbearance to Credit Agreement (the “Forbearance Agreement”) with its Lenders. Pursuant to the Forbearance Agreement, the Lenders have agreed to temporarily forbear from exercising certain rights and remedies under the Credit Agreement. The Forbearance Termination Date is on the earliest of (i) September 15, 2014 and (ii) the date on which Great Lakes commits additional breaches under the Credit Agreement. In consideration of entering into the Forbearance Agreement, the Lenders have agreed to lend the Company up to an additional $3.0 million under our term loan and defer an additional $2.0 million of amortization payments until maturity of the loan, which were due and payable by September 30, 2014. As of July 30, 2014 the Company has borrowed an additional $2.0 million under the terms of the Forbearance Agreement and deferred a $1.0 million amortization payment payable on June 30, 2014. The Company agreed to pay a forbearance fee of $242,000, a funding fee of $60,000, and a commitment fee of $60,000, and also agreed to hire three firms to market the Company’s excess aircraft and inventory and to hire a financial advisor to advise the Company on raising capital through additional equity financings, debt financings, or other liquidity events. As announced on June 30, 2014, the Company engaged Raymond James as its investment banker with respect to new financing options and strategic alternatives.
Until the Company is able to re-staff with enough qualified pilots to restore service to suspended or terminated markets, it is expected that the Company will not have sufficient liquidity to service its debt obligations for the 12 month period ending December 31, 2014.
The Company cannot make assurances that its assets or cash flow from operations will be sufficient to repay borrowings under its existing debt obligations, either upon maturity or if accelerated, that it will be able to refinance or restructure the payments due under the terms of the Credit Agreement. In addition, the Company cannot make assurances that its efforts to obtain financing or other liquidity events will be successful. This would have a material adverse impact on our liquidity and financial position, and would raise substantial doubt about our ability to continue as a going concern.
With the exception of the foregoing there have been no material changes with respect to the risk factors disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2013, filed with the Securities and Exchange Commission on April 9, 2014.
As of June 30, 2014 the Company was not in compliance with the leverage coverage ratio financial covenant contained in the Company’s senior credit facility’s Credit Agreement. Specifically the Company was required to maintain a leverage ratio, calculated by dividing average quarterly borrowings by trailing 12 month earnings before interest, taxes, depreciation and amortization (EBITDA), as defined by the Credit Agreement, of 2.25:1 or less. At March 31, 2014, the Company’s leverage ratio was calculated to be 4.27:1, which was not in compliance with the terms of the Credit Agreement. Furthermore, the Company does not expect to be in compliance with its leverage ratio covenants throughout the balance of 2014 as EBITDA is calculated on a trailing 12-month basis. At March 31, 2014 the Company did not submit its audited annual report to its lenders within the prescribed timeframe required by the terms of the Credit Agreement. Furthermore, the auditor’s report over the Company’s financial statements for the fiscal year ended December 31, 2013 contained an explanatory paragraph referencing substantial doubt about the Company’s ability to continue as a going concern. These are both covenant violations that permit the Company’s lenders to exercise their right to declare our debt obligations to be immediately due and payable under the terms of the Credit Agreement. As a result of not being in compliance with the terms of the Company’s senior credit facility and the expectation the company will not be in compliance with the terms of the senior credit facility throughout 2014, all borrowings (approximately $24.2 million) under the Company’s senior credit facility are classified as current maturities as of June 30, 2014.
Effective May 30, 2014, the Company entered into the Fourth Amendment and Second Forbearance to Credit Agreement (the “Forbearance Agreement”) with its Lenders. Pursuant to the Forbearance Agreement, the Lenders have agreed to temporarily forbear from exercising certain rights and remedies under the Credit Agreement. The Forbearance Termination Date is on the earliest of (i) September 15, 2014 and (ii) the date on which Great Lakes commits additional breaches under the Credit Agreement. In consideration of entering into the Forbearance Agreement, the Lenders have agreed to lend the Company an additional $3.0 million under our term loan and defer an additional $2.0 million of amortization payments which were due and payable by September 30, 2014. As of July 30, 2014 the Company has borrowed an additional $2.0 million under the terms of the Forbearance Agreement and deferred a $1.0 million amortization payment payable on June 30, 2014. The Company also agreed to pay a forbearance fee of $242,000, a funding fee of $60,000, and a commitment fee of $60,000.
See “Exhibit Index.”
Dated: August 14, 2014 By:
10.1 Third Amendment and Forbearance to Credit Agreement dated April 1, 2014 between and among Great Lakes Aviation, Ltd., Crystal Financial LLC, and GB Credit Partners, LLC (incorporated by reference to Current Report on Form 8-K filed on April 3, 2014)
10.2 Fourth Amendment and Second Forbearance to Credit Agreement dated May 30, 2014 between and among Great Lakes Aviation, Ltd., Crystal Financial LLC, and GB Credit Partners, LLC (incorporated by reference to Current Report on Form 8-K filed on June 4, 2014)
(1) Incorporated by reference to the Company’s Registration Statement on Form S-1/A, Registration No. 333-159256, as filed September 3, 2009.
(2) Incorporated by reference to the Company’s Registration Statement on Form S-1, Registration No. 033-71180.