Estero, Florida-based Western Global Airlines has filed for Chapter 11 bankruptcy protection. The company operates chartered cargo jets for the military and other organisations. The carrier is undergoing restructuring with the help of US$77 million in financing from creditors and bondholders.
The filing was not unexpected after revenues fell heavily and a heavy debt load. Western Global founder and CEO Jim Neff reinvested in the company along with new investors and existing stakeholders, according to the announcement. The reorganisation will reduce the company’s debt by more than US$450 million and give the cash-strapped airline capital to operate its aging fleet of 21 freighters, two-thirds of which are currently out of service.
“WGA will continue to operate as usual and provide reliable and safe service to its customers throughout the reorganisation process and going forward. The company, the founder, the plan investors, and the ad hoc group (bondholders) are focused on moving through this process expeditiously and thoughtfully to the benefit of employees, customers, and other stakeholders,” Western Global said.
Western Global’s business has substantially declined in the past year from the peak shipping demand triggered by the coronavirus pandemic, which has made it harder to make debt payments and leading to a liquidity crunch. The overall market is down 7% to 10% over the past 16 months and airlines are reporting appreciably lower revenues for cargo. Amazon, Western Globa’s largest customer, ended its contract in January.
Western Global has a fleet of aging MD-11 and Boeing 747-400 freighters that are expensive to operate and maintain. Fifteen of its 21 aircraft are older than 25 years and the average fleet age is 28.4 years. Western Global said its restructuring adviser is FTI Consulting and that Seabury, an Accenture company, is acting as commercial adviser. (£1.00 = US$1.27 at time of publication).
