Cargo Operator Western Global Airlines Files for Bankruptcy Protection

Restructuring plan designed to reduce debt load by $450M.

Monday, August 07, 2023 at 01:54 PM ET

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A Boeing 747-400 freighter operated by Western Global Airlines approaches Chicago O’Hare International Airport on July 11, 2019. WGA owes the airport authority nearly $200,000 for unpaid fees. [Photo: Shutterstock/Carlos Yudica]

Key Takeaways:

Western Global Airlines filed for Chapter 11 bankruptcy protection to restructure, citing collapsing revenues, heavy debt, and an aging fleet.
The company secured $77 million in new financing and plans to reduce its debt by over $450 million, stating it will continue normal operations during the process.
Founder and CEO Jim Neff reinvested in the company and took steps to reduce debt pressure, including a controversial purchase of senior secured debt, while allocating a $70 million benefit to other stakeholders.
The bankruptcy is attributed to a post-pandemic decline in cargo demand, the end of a contract with its largest customer Amazon, and the high costs of operating its old aircraft fleet.

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Western Global Airlines, which operates chartered cargo jets for the U.S. military and other customers, on Monday filed for Chapter 11 bankruptcy protection and announced it will restructure with the help of $77 million in financing from creditors, including bondholders with more than 85% of the outstanding senior unsecured notes.

A bankruptcy restructuring has been expected for weeks because of collapsing revenues, a heavy debt load and the decision by credit rating agencies to pull their coverage over the company’s lack of financial transparency. Bloomberg previously reported that Estero, Florida-based Western Global Airlines was arranging debtor-in-possession financing to support ongoing operations under a court-approved bankruptcy plan.