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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
March 17, 1997
Date of Report (Date of earliest event reported)
GREAT LAKES AVIATION, LTD.
(Exact name of Registrant as Specified in its Charter)
Iowa 0-23224 42-1135319
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(State or other jurisdiction (Commission File No.) (IRS Employer ID No.)
of incorporation)
1965 330th Street
Spencer, Iowa 51301-9211
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(Address of principal executive offices)
(712) 262-1000
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(Registrant's telephone number, including area code)
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ITEM 5. OTHER EVENTS
Great Lakes Aviation, Ltd. (the "Company") is filing a press release issued
by it on March 17, 1997, reporting, among other things, the Company's net loss
for the quarter ended December 31, 1996.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
The following is an Exhibit to this Current Report:
99 Press Release, dated March 17, 1997
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
March 18, 1997 GREAT LAKES AVIATION, LTD.
By: /s/ A.L. Maxson
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A.L. Maxson
Executive Vice President Finance and
Chief Financial Officer
2
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EXHIBIT INDEX
Exhibit
Number Description of Exhibit
99 Press Release, dated March 17, 1997
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EXHIBIT 99
[LOGO] GREAT LAKES AVIATION, LTD.
Contact: A. L. Maxson
Executive Vice President Finance
Great Lakes Aviation, Ltd.
Bloomington, MN 55431
(612)767-7000
For Immediate Release
March 17, 1997
Great Lakes Aviation, Ltd. (the "Company") reports that, based on
preliminary information, the Company's net losses for the three months and
twelve months ended December 31, 1996 were $6.4 million ($0.84 per share) and
$11.3 million ($1.49 per share), respectively, compared to losses of $0.5
million ($0.06 per share) and $2.7 million ($0.35 per share) in the respective
1995 periods. Stockholders' equity at December 31, 1996 was $20.2 million.
Both 1995 periods include a gain of $3.9 million on sale of slots at Chicago's
O'Hare Airport. Losses for the most recently completed quarter were greater
than anticipated due principally to flight cancellations resulting from severe
weather conditions in the upper Midwest, increased fuel prices and to
unanticipated turnover in flight personnel due to major carrier hiring. The
above 1996 loss is before any adjustment to the value of spare parts inventory
as described below.
Severe weather conditions continued into January 1997 when, for the month
on average, 27% of passengers holding reservations were not carried on the
Company's United Express flights as a result of weather driven delays and other
cancellations, changes in passenger plans, and multiple bookings. By
comparison, in January 1996 approximately 15% of such passengers were not
carried. In February 1997, this lost passenger percentage was 16%, up from 12%
in February 1996. Unit fuel prices, however, have abated from the 1996 fourth
quarter level.
As a result of its recent losses, the Company is experiencing liquidity
difficulties. The Company is currently negotiating with its principal creditor,
which is also its primary aircraft supplier, and certain other creditors for
deferral and other credit accommodations. Discussions with its principal and
other creditors are ongoing, and there can be no assurance that such
negotiations will be successful. The Company expects the report of its
independent public accountants for fiscal 1996 to include a "going concern"
qualification.
These losses have resulted in a violation of a financial covenant contained
in an agreement under which the Company leases two of its Brasilia aircraft.
The Company is not current on certain vendor accounts and scheduled lease and
debt payments and has received a notice of default concerning non payment of
obligations related to a short term lease under which it operates two of its
Brasilia aircraft. There are also disagreements about interpretation of certain
terms contained in the latter agreement. Although the Company is negotiating
with these lessors and lenders, there can be no assurance that the lessors or
lenders will agree to amend the agreements or waive the defaults.
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During the fourth quarter of 1996, the Company returned three short term
lease Beechcraft 1900C aircraft as part of an accelerated fleet reorganization
program. Approximately $1.2 million was spent on early engine overhauls as a
part of the lease return conditions. In addition, the Company plans to return
three additional aircraft during the first half of 1997. As a consequence of
reducing the number of Beech 1900C aircraft in its fleet, the Company believes
that it has spare parts inventory in excess of its requirements. Certain spares
have been sold in 1997 and efforts to further reduce this inventory continue.
The Company is currently reviewing its investment in this inventory and expects
to incur a substantial charge to write it down to estimated net realizable
value. This charge will increase the 1996 fourth quarter and year to date loss
and reduce the balance of stockholders' equity described above.
Substantial schedule revisions have been implemented since October 1, 1996
to improve financial results. Service to twelve cities has been eliminated,
which has the effect of making available five aircraft for return or for other
services. These cities are:
Carbondale, IL Mankato, MN Brookings, SD
Galesburg, IL Asheville, NC Mitchell, SD
Muncie, IN Wilmington, NC Milwaukee, WI
Fairmont, MN Grand Forks, ND Washington, DC
(National)
As a result of certain of these schedule adjustments among other factors,
January and February 1997 revenue per passenger mile (Yield) increased 9.3% and
14.6% respectively over the corresponding 1996 months, while passenger miles
increased 0.1% in January and declined 5.8% in February compared to the 1996
months. February had one less day in 1997 than in 1996. The 10% Federal Ticket
Tax was reinstated on March 7, 1997, and the ultimate impact of this on fare
levels and traffic is unknown.
Substantial strengthening of the system is expected to result starting in
the second quarter from new non-stop services from Dubuque and Waterloo, Iowa,
Sioux Falls, South Dakota and Fargo, North Dakota to Chicago's O'Hare airport;
however, the level of market acceptance for these services is yet to be
determined. Enhancing this is United's June 5, 1997 anticipated termination of
Boeing 737 jet service in the Sioux Falls to Chicago O'Hare market. Further,
recognition by the Department of Transportation of the costs of providing
Essential Air Service to small communities has enabled the Company to negotiate
substantial increases of public service revenues.
Great Lakes Aviation, Ltd. maintains three regional airline marketing
identities providing scheduled passenger and air freight service. In the Upper
Midwest, the Company operates primarily as United Express under a cooperative
agreement with United Airlines, Inc. and serves 54 destinations. Along the East
Coast, the Company operates as Midway Connection under a cooperative agreement
with Midway Airlines, Inc. and serves 13 destinations. In Arizona, New Mexico,
certain cities in the Midwest, and Mexico, the Company operates under the name
Great Lakes Airlines and serves 13 destinations, two of which are also served as
United Express.
Great Lakes Aviation, Ltd. trades on the NASDAQ/NMS under the symbol GLUX.
FOR MORE INFORMATION VISIT US AT OUR WEB SITE
HTTP://WWW.GREATLAKESAV.CO
