After weeks of speculation about its future, Western Global Airlines (KD, Fort Myers Southwest Florida) says maintaining operations is in the best interest of all its stakeholders. In a July 19 statement, the airline said since the end of 2022, it had been "disproportionately impacted" by unpredictable external forces, including the Ukraine war, a weakening global economy, increasing costs, and the recurrence of Covid-19 in China.
The statement also confirmed that founder and CEO James (Jim) Neff had purchased outstanding loans held by Western Global's senior lenders in a competitive process run at arm's length by the lenders. Earlier this month, ch-aviation reported that Neff acquired USD115 million worth of distressed debt from North Carolina-based Trust Financial Group at USD0.40 on the dollar. "This was a positive step in an effort to protect Western Global Airlines and provide the company additional time and resources, and the company immediately benefited from improved lending conditions," reads this week's statement. "As a result of the purchase by Jim Neff, Western Global Airlines has been positioned to continue to provide its customers with the safe and effective services they rely on."
The statement also addressed media coverage concerning a putative class action lawsuit connected to a 2020 employee stock ownership plan (ESOP). The statement said there has been no new litigation since media coverage began about the carrier's distressed financial position and Neff leaping to the front of the creditor's queue after buying the discounted debt.
Western Global Airlines says the ESOP was set up after a thorough due diligence period involving external third-party advisors and in compliance with the Employee Retirement Income Security Act and all other relevant regulations. Employee participation in the scheme was voluntary, and those who participated received share allocations at no cost to them. "Employees were granted beneficial ownership through an ESOP not only in the airline but also in Jim Neff's two affiliated leasing companies, which leased aircraft to the airline and were transferred into the airline as part of creating and funding the ESOP," notes the statement, adding that there are no Western Global shares held in employees' 401(k) (company-sponsored retirement) accounts.
Established by Neff in 2013, Western Global Airlines says it was consistently profitable until the end of 2022, when those unpredicted external forces struck. According to the ch-aviation fleets module, Western Global operates a fleet of 20 aircraft, including two B747-400(BCF)s, one B747-400(BDSF), one B747-400FSCD, and sixteen MD-11Fs. However, only five aircraft are now in service, including two of the B747s and three of the MD-11Fs. Last month, ahead of Neff buying the debt, talks with creditors canvassed multiple options, including Chapter 11 insolvency.
Western Global Airlines now says that as a result of Neff's intervention and acquisition of its debt, the carrier has "been positioned to continue to provide its customers with the safe and effective services they rely on."
