The travel industry has faced financial distress over the last year, led by bankruptcy filings by several airlines.
Low-cost airline Spirit Airlines was the most prominent airline to file bankruptcy as it filed its Chapter 11 petition on Nov. 18, 2024. The filing came after a judge blocked JetBlue Airways’ (JBLU) plan to acquire it last February and a merger deal with rival Frontier Airlines (ULCC) fell through.
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More than a month after the Spirit filing, another low-cost airline Silver Airways on Dec. 30 filed for Chapter 11 protection in the U.S. Bankruptcy Court for the Southern District of Florida.
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The airline, which flies to Key West, Tampa, and Orlando in the U.S. and Nassau, St. Kitts, San Juan, and Santo Domingo across the Caribbean, was burdened by heavy debts and needed to file bankruptcy to give it necessary breathing room to allow it to secure capital and restructure its business.
A smaller airline, Egyptian low-cost and charter airline flyEgypt, on Oct. 21, revealed it was filing for bankruptcy and canceled all flights out of Cairo International Airport and Sharm El Sheikh International Airport.
The airline ceased operations in October 2024 and was seeking to liquidate its assets before the Egyptian Civil Aviation Authority required it to arrange to repay certain debts.
Mondee Holdings joins other travel industry firms in bankruptcy.
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Mondee files Chapter 11 bankruptcy to sell its assets
Mondee Holdings (MOND) and 18 affiliates that operate a global artificial intelligence-powered travel technology platform, filed for Chapter 11 protection. The filing is part of a plan to sell its assets to a stalking-horse bidder and entity owned by affiliates of its prepetition lenders, TCW Asset Management Co. and Wingspire Capital, and the company’s former CEO.
Related: Another major shipping company files for Chapter 11 bankruptcy
Under a proposed restructuring support agreement, co-founder and former CEO Prasad Gundumogula will own a 75% equity stake in the company and serve as the new CEO.
The debtor’s prepetition lenders will also provide $49 million in debtor-in-possession financing to finance operations during the bankruptcy case, which includes $27.5 million of new money and a rollup of $21.5 million of prepetition debt.
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The debtor listed $362.8 million in assets and $358.6 million in liabilities in its petition filed Jan. 14 in the U.S. Bankruptcy Court for the District of Delaware, including over $230 million in prepetition term loan debt.
Its largest unsecured creditors include two law firms — Reed Smith LP, owed over $1.89 million, and Akin Gump, owed about $949,000 — and accountant Deloitte & Touche, owed more than $800,000.
The Austin, Texas-based company operates a travel technology platform that connects over 65,000 travel agencies and experts with global travel inventory including airlines, hotels, cruise lines, and car rentals.
Numerous headwinds force bankruptcy filing
The debtor filed its petition blaming numerous headwinds, including the Covid-19 pandemic, difficulty securing liquidity, negative stock performance after a 2022 SPAC transaction, and increased travel industry competition, according to a declaration by Chief Restructuring Officer Mohsin Y. Meghji of M3 Advisory Partners.
Before filing for bankruptcy, the company considered several transactions, conducted liquidity analyses, and reviewed several restructuring alternatives to address its liquidity issues.
Mondee determined that its best option was to sell its assets to preserve and maximize the value of its assets. The company marketed its assets to potential strategic partners and financial buyers before filing bankruptcy but was unable to reach an agreement on a sale.
The debtor targets a sale process, plan confirmation, and Chapter 11 exit within 100 days, the declaration said.
The debtor, founded in 2011, acquired several large businesses since opening, including the largest air ticket consolidator in the United States and Canada and became a successful marketplace for negotiated airfares.
During the Covid-19 pandemic, it acquired more companies in new markets related to lodging, hotels, car rentals, and cruise companies. In 2023, it incorporated A.I. into its business to create user-friendly interfaces and seamless support processes, according to the declaration.
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