Western Global Files for Chapter 11 Bankruptcy Protection

Troubled US freighter operator, Western Global Airlines (WGA), has taken a significant step towards stabilizing its operations by filing for Chapter 11 bankruptcy protection. Last week, reports emerged about the airline’s efforts to reach a bankruptcy financing deal, which has now been confirmed by WGA. The agreement with key financial stakeholders will see the company enter Chapter 11 with over $77 million in financing from founder Jim Neff and bondholder investors (Ad Hoc Group).

The Chapter 11 reorganization will have several positive effects for WGA, including reducing the company’s debt by more than $450 million and infusing substantial new capital. The move aims to ensure that the airline can continue sharing the economic benefits of ownership with its employees.

WGA has filed certain “first day” motions in the US Bankruptcy Court to support ordinary-course operations, such as employee compensation and benefits, honoring customer commitments, and fulfilling obligations to vendors. The company expects these motions to be approved shortly after the case begins.

Despite the restructuring efforts, WGA remains committed to delivering reliable and safe services to its customers throughout the reorganization process and beyond. Founder Jim Neff expressed his loyalty and dedication to WGA and its employees, emphasizing his confidence in the plan outlined in the restructuring support agreement (RSA).

Earlier this year, ratings agency Moody’s downgraded WGA’s ratings, citing a liquidity shortage and other concerns. However, the bankruptcy filing and financing deal represent a positive step towards strengthening the airline’s financial position and securing a better future for the company, its employees, and its customers.

In the past, WGA had expansion plans that included an approved freighter fleet expansion by the US Department of Transportation and an order for two 777 freighters from Boeing, which has since been canceled. The air cargo market has seen fluctuations, with demand declining, belly capacity returning, and fuel prices increasing.

Presently, Western Global Airlines operates a fleet of 19 MD-11 and 747-400 freighters, according to its website. As the company proceeds with its Chapter 11 reorganization, it hopes to address the challenges it faces and emerge stronger in the competitive air cargo industry.