The article was originally published in RECOVERY Magazine, Autumn 2017 and is reproduced with permission from the publisher.
"FTI Consulting and DLA Piper worked closely together over a 12-week period to deliver an exceptional result in challenging circumstances. The commercial and technical acumen of the DLA Piper team led by Neil Riley was very impressive and their client delivery was exemplary."
Senior Managing Director,
The aviation industry is a
network business, relying
upon strict regulation,
rigorous safety standards and
operations planned to
minute detail. Unexpected financial or
operating changes, particularly to ‘ground
handling’ services (the aggregation of
services that manage customer check-in
through to loading and unloading the
aircraft) can have an impact on the lives of
thousands of employees and hundreds of
thousands of air travellers. When Aviator
UK, the company that supplied ground
handling services to four major UK airports,
ran into immediate financial trouble it was
clear that action would be needed – and fast.
The Aviator Group is a large European
ground handling operator, headquartered
in Sweden. The Group operates in Europe
with a focus on the Nordic region and, until
recently, included UK operations (acquired
from Servisair in 2015). The UK business
provided ground handling services to most
major airlines at Gatwick, Birmingham,
Newcastle and Manchester airports, and
employed approximately 1,700 people in
the UK. In mid-2016, while the group was
in the process of negotiating refinancing of
its debt facilities, its lender group advised
that it was no longer supportive of the
Group’s UK operations.
Following the unexpected (and
immediate) loss of financial support for UK
operations, and incurring a £3 million+ wage
bill, the directors of Aviator UK faced the
risk that the business was cash-flow
insolvent, with potentially no other option
but to cease operations immediately.
The directors were cognisant that the
potential disruption resulting from ceasing
UK operations would have been
reminiscent of other major aviation
incidents, such as the Icelandic ash cloud in
2010, which cost the economy over €1 billion.
As a result, FTI Consulting and DLA Piper
were engaged to advise the board and
management of Aviator UK on alternative
options to avoid the need to immediately
Over the 48 hours following the
insolvency, a plan was developed to avoid
the need for an immediate shutdown of
operations. The plan involved securing
sufficient cash-flow support from key
stakeholders (primarily airports and airline
customers) to manage the transition of
customer contracts and employees to
alternative ground handling suppliers in a
controlled manner over a 12-week period.
This article focuses on the specific
legal and operational issues involved in
managing this situation.