Eos Airlines Crashes


Eos Airlines today filed for Chapter 11 bankruptcy protection, and said its final flights between New York’s Kennedy Airpoirt and London’s Stansted Airport would be tonight. This is just the latest in a recent rash of PE-backed airlines to go bust, following Aloha Airlines and ATA Airlines.

In a statement, Eos said: “This announcement is particularly regrettable since we have achieved so much, including having a term sheet in hand for additional financing. Clearly, even in today’s challenging economic and credit environment, investors believe in Eos. Unfortunately, some issues arose that prevented the parties from moving forward.”

Eos had said earlier this month that it was close to raising $50 million from a “current investor.” Smart money says that investor was Golden Gate Capital, which has by far the deepest pockets of Eos’ current shareholder base. I’m sure that macro economic and airline industry woes are the primary reasons why Golden Gate pulled the plug, but don’t discount more general fatigue. This was always a controversial deal within Golden Gate, since the tech-focused private equitty firm strayed way off strategy by doing a startup airline investment.

Overall, Eos had raised over $123 million from Golden Gate, Maveron, CCG Venture Partners and Sutter Hill Ventures.

I’ve sent an email to Golden Gate’s David Dominik requesting comment, and will let you know if/when he replies. More on this story tomorrow…