Air cargo: Rising fuel costs and poor credit rating spells doom for Gemini…again
Patrick Burnson, Executive Editor -- Logistics Management, 8/21/2008
DULLES, Va.—Recent news that that Gemini Air Cargo is seeking Chapter 11 bankruptcy protection for the second time in two years means some short-term capacity problems for some shippers. This news was reported by various media outlets over the past few days.
“Shippers entirely reliant on all-cargo airlines will feel the pinch,” says George Van Horan, senior analyst with IBIS World, a global B2B research firm. “But we see this as more of an independent failure that does not reflect on the recovery of the industry overall.’
Gemini filed its recent Chapter 11 in the U.S. Bankruptcy Court of the Southern District of Florida. Besides its Miami office, it served shippers from Brussels and Ostende, Belgium as well, providing airport-to-airport service under renewable long-term contracts.
But the company’s own “short-term operating strategy” was a problem, says Van Horan.
“This is a bad time to be over-extended in the credit market,” he said. “And Gemini had for too much exposure to take advantage of the rebound we expect to happen in 2010.”
Meanwhile, the company’s affiliates—Gemini Cargo Logistics, Gemini Leasing Holdings, and Gemini Leasing—have also sought bankruptcy protection.
“Gemini is in the process of permanently winding down its business. After Aug. 29, 2008, Gemini will no longer be receiving or responding to any inquiries via telephone contact,” according to a statement on its Web site. The statement also noted that Gemini "ceased all operations, effective August 12, 2008."
As a “wet-lease” player, Gemini operated four MD-11 freighters for other carriers while absorbing costs for insurance and maintenance. Among its clients were Lufthansa, FedEx, British Airways and Finnair.
The Gemini collapse comes in the wake of a flurry of failures among smaller passenger airlines, and most notably after Kitty Hawk Air Cargo ceased operations due to financial woes late last year.
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