Is Air Methods bankruptcy a warning? | Aviation International News

Air Ambulances Fly Through Economic Turbulence

Below cost reimbursements threaten the industry

Air Methods helicopter ambulance — Air Methods filed for bankruptcy amid mounting debt, influenced by private equity investment and legislative changes. (Photo: Air Methods)

By Mark Huber • Contributor

December 1, 2023

Air ambulance provider Air Methods filed for Chapter 11 bankruptcy protection in October, calling the decision a strategic move to position it for long-term success. The move could be unique to the company’s highly-leveraged balance sheet—or a harbinger of turbulence ahead for the entire air ambulance industry. This space is increasingly controlled by private equity investment firms seeking a high rate of return for investors while being squeezed by reimbursements that are significantly below costs from health insurers and government programs.

Air Methods currently operates 365 aircraft—mainly helicopters—from 275 bases in 47 states. Under terms of the pre-packaged bankruptcy filing with the U.S. Bankruptcy Court for the Southern District of Texas, Air Methods will wipe out $1.7 billion in debt. Approximately $1.25 billion of that was variable interest loan debt, tied to dramatically rising interest rates, that was due in April 2024. Another $500 million on 8 percent interest bonds was due in 2025.

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