The June 7 initial bid deadline for bankrupt Canadian MRO provider Aveos's assets passed with mixed news, including indications that is willing to help land work for the buyers of the engine and component businesses, while no bids were received for Aveos's airframe assets.
An agreement between Air Canada and Aveos will create a “new, exclusive” engine maintenance contract that will be offered for sale along with the Aveos engine facility, “so long as the successful purchaser meets Air Canada's requirements,” according to a filing prepared by the court-appointed monitor overseeing the proceedings. “Air Canada has agreed to provide its support and consent to the assignment of the new engines contract,” the monitor explained. The contract would run through 2018, according to the court filing.
Air Canada also would issue a request for proposals for some 1,000 components serviced by Aveos. “The components RFP will be used to secure a contract for a term of not less than five years and not more than 10 years, and will stipulate that the work on these components must be undertaken in the current Aveos components facility,” the filing states. The agreement calls for Air Canada to present a contract (or contracts) to Aveos by July 11.
According to the filing, this would result “in a higher probability that both the engines and components business will be sold to a party that can restart operations, as it will have the support of Air Canada, Aveos's largest customer.”
Air Canada's characterization of the agreement was less definitive than the monitor's report. “As disclosed in the monitor's report, we have provided arrangements that will assist Aveos's chief restructuring officer in finding potential purchasers for the engine and component business,” Air Canada states. Those details are confidential.
The monitor's report also indicates that no bids were received for the airframe business, which includes facilities in Montreal, Vancouver and Winnipeg and employed about 1,500 of the 2,600 employees laid off.
Aveos, the former Air Canada maintenance division spun off in 2007 to become Air Canada Technical Services, ceased operations in March and filed for protection under Canada's Companies' Creditors Arrangement Act (CCAA). After determining that restructuring was not an option, the company set up a plan to divest its businesses, which include airframe, engine and component operations as well as a wheel shop, training arm and other assets.
June 7 was the Phase 1 deadline for all asset lots except component maintenance. Bidders selected from Phase 1 moved on to Phase 2, which concluded June 14. Now, Aveos is in the process of selecting bidders. The component business will follow the same pattern, starting with a Phase 1 deadline of July 13 and a Phase 2 deadline of July 17.
Meanwhile, former Aveos customers and suppliers are working to find new providers and reclaim their property.
Shortly after Aveos filed for CCAA protection, it reported having 64,000 component numbers in 71,000 bins spread over 19 locations. It also had three airframes—one, one and one , all belonging to Air Canada—and 54 engines.
Air Canada says it shipped “several” aircraft to other providers within a month of the bankruptcy and began working with 40 Canadian suppliers on component, engine and related support services. The carrier also confirms it is “still in the process of finding a heavy maintenance provider.”
Aveos was Air Canada's primary MRO provider, conducting 123 of the airline's 135 heavy checks and 52 of 56 engine checks since the start of 2011.
Among others impacted by Aveos's closing is AJ Walter Aviation (AJW), which supplied parts and services to Aveos as part of support agreements with several airlines, including Volaris, Interjet and Air Transat. An AJW court motion dated May 22 states that, Aveos had 835 AJW parts under its control when it filed for bankruptcy. The support agreements called for AJW to retain ownership of all parts it supplied, making them eligible for repossession.
However, six weeks into the CCAA process, AJW had recovered just 86 parts and was authorized to repossess 400 more, leaving 350 units in limbo and hitting AJW's bottom line hard. Among the company's expenses, according to the court filing, is $2.7 million in new inventory to help replace the Aveos-held parts and “satisfy customer orders and existing contractual requirements.” AJW also reported it has lost $2.1 million in lease revenue on the parts in Aveos's possession.
Another bankruptcy court took action with a different North American MRO, Pemco World Air Services in Florida. Singapore Technologies Engineering Ltd. subsidiary Vision Technologies Aerospace has purchased Pemco World Air Services' Tampa aerospace maintenance facility,freighter conversion supplemental type certificates and other assets in a bankruptcy auction. The winning bid was for $49.7 million and includes $6.2 million in liabilities.
tells Aviation Week it plans “to fill about 85% of the [Pemco] hangars 12 months after commencement.”
The facility will be ST Engineering's third in the U.S., joining facilities in Mobile, Ala., and San Antonio.
Pemco filed for Chapter 11 bankruptcy protection on March 5. As part of its restructuring, Pemco closed its Dothan, Ala., facility last month. The purchase is expected to close in July.