Florida-based global cargo airline Western Global Airlines (WGA) has filed for voluntary protection under Chapter 11 of the US Bankruptcy Code and announced a restructuring support agreement (RSA) with creditors in an effort to save the business.
The carrier, which said it serves 400 cities in 135 countries, hopes to reduce its debt load by $450m (£353m) via the plan led by founder and CEO Jim Neff.
In late June, Neff offloaded $115m of company debt via a personal investment of $45m. The $70m benefit subsequently created was important as it improved the company’s credit situation. In the company statement, Neff said he “always will be loyal to WGA”.
It has now been followed by a $77m (£60m) fund injection by Neff and an ad hoc group of investors and creditors. This cash is intended to keep the firm’s operations afloat during the Chapter 11 and restructuring process.
The company said in a statement announcing the debt relief plan, if it’s successful, the airline will reduce its debt by $450m. This would include “deleveraging the balance sheet by 86% and partnering with new investors.”
As part of the recovery plan, WGA and its creditors said it would “continue its commitment to sharing the economic benefits of ownership with employees.” Later in the statement, the group explained it was their “intention” to consider an employee stock ownership plan (ESOP).
Neff said: “I am—and always will be—loyal to WGA and its employee team. As such, my number one priority is preserving the long-term viability and value of WGA and protecting our employees.
“All my objectives regarding the company align with this overriding goal.
“The plan we have outlined in the RSA reflects my continued dedication to and belief in WGA, along with the overwhelming support of our key financial stakeholders. I am confident that this plan will tremendously strengthen our financial position and ensure a better future for WGA, our people, and our customers.
“As always, we have the utmost gratitude to our employees, loyal customer base, and industry partners for their enduring support and appreciate the continued collaboration with our largest financial stakeholders.”