The North Slope Borough will rent out RavnAir Group facilities in Utqiagvik and Deadhorse as the airline proceeds with bankruptcy, according to a letter submitted Monday during bankruptcy proceedings.
The borough issued an emergency order earlier this month to commandeer the airline’s assets in order to maintain mail and cargo services after the company abruptly filed for bankruptcy. The state attorney general, however, deemed the seizure to be void under law.
When RavnAir Group filed for bankruptcy on April 5, it left communities scrambling to find an alternative carrier to deliver essential mail and cargo items, including medications and food supplies. The carrier employed 1,300 people and provided services to 115 communities throughout the state.
The company reported its passenger revenue dropped 90% during the COVID-19 pandemic. This revenue made up 54% of the company’s total revenue, according to bankruptcy filings. Ravn had roughly $90 million in debt when it ordered operations to cease.
In the North Slope Borough, Wright Air Service stepped in to deliver mail and cargo but needed to access Ravn-owned facilities where the mail is collected and processed. Before the company went bankrupt, debtors agreed to allow access to the facilities so that operations could continue. When official bankruptcy paperwork was filed on April 5, employees were ordered to lock the facilities because the property was no longer owned by Ravn but instead by creditors.
Borough Mayor Harry K. Brower Jr. later clarified in a Facebook post that the borough’s order did not seize any airplanes, but provided access to the facilities so other air carriers could use them to complete essential duties.
“This only has to do with access to rusty old hangers and terminals,” he wrote.
Alaska Attorney General Kevin Clarkson said the order was “void under federal and state law,” and that the borough does not have authority during bankruptcy proceedings to take control of the buildings.
Brower asserted he acted within the borough’s authority, and said the order was a way to protect the community.
“On the North Slope, we have no road system, no rail system, nor a Marine Highway between our villages and Deadhorse,” he wrote. “We rely on air transport to and from our villages. Planes deliver the mail, (our) food, medicine (and) transport our people when a snow machine or tundra terrain vehicle won’t (do).”
The borough opened old facilities and Wright Air co-owner Matt Atkinson said the company paid out of pocket to rent necessary equipment in the meantime so that services would continue uninterrupted.
On Friday, the borough paid RavnAir Group debtors $110,000 for immediate access to the facilities, according to the term agreement. The borough will continue to pay $100,000 monthly for access.
“The Debtors have received and expect to continue to receive inquiries from other municipalities and airline carriers, who wish to discuss commercial arrangements with respect to the use of the Debtors’ other facilities and personal property, and the Debtors hope they will be able to enter into similar arrangements with such other municipalities and counterparties,” the letter stated.
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Clarification: This article has been updated to clarify the borough’s authority to seize property was void during bankruptcy proceedings.