Troubled Western Global Airlines is defending against a $750,000 legal claim by Radiant Global Logistics for allegedly reneging on contracts to transport aircraft components needed for fleet maintenance as founder Jim Neff maneuvers to keep the carrier out of bankruptcy.

Radiant Logistics says Western Global Airlines didn’t pay 41 invoices for delivery of aircraft parts between September and November last year and that it owes more than $556,000, plus nearly $210,000 in interest, according to a suit filed in March in the U.S. District Court for the Western District of Washington.

Radiant Logistics (NYSEAmerican: RLGT) is a $1.2 billion, publicly traded multimodal logistics company based in Renton, Washington. Western Global Airlines hired Distribution by Air, a Radiant freight forwarding subsidiary, to manage transportation of its shipments.

In its complaint, Radiant Logistics said it still possesses some aircraft parts and has the right to sell them through an auction to recover some of the money owed by Western Global and asked the judge to place a lien on the property.

The parties informed the court that they opt to pursue mediation, but if there is no resolution a trial date will be set for early 2024, court records show.

The lawsuit adds to the turmoil surrounding Estero, Florida-based Western Global Airlines and questions about its ability to survive. A severe downturn in air cargo business has hit WGA harder than most competitors, with the loss of its contract with Amazon being the biggest blow. An Amazon spokesman said Amazon has not used WGA since January. Sharply lower revenues combined with high maintenance costs for its aging fleet of 21 Boeing 747-400 and McDonnell Douglas MD-11 freighters, as well as a shortage of pilots and an employee lawsuit have made it difficult to pay off a heavy debt load.

Credit ratings agencies Fitch and Moody’s this year downgraded Western Global’s debt to junk status and recently withdrew their ratings, citing a lack of financial transparency at the company. Bloomberg recently reported that the freighter operator is considering several restructuring options, including filing for bankruptcy. 

In an online message board for pilots, one person in March said some WGA pilots have had small company credit card charges denied. 

A check of FlightAware and other aviation databases shows that only six aircraft in Western Global’s fleet have been active in the past week. Many are parked at Southwest Florida International Airport in Fort Myers or the company’s maintenance center in Shreveport, Louisiana. Two aircraft have been sent to desert storage. And Western Global earlier this year canceled an order with Boeing for two factory-built 777 cargo jets, according to Fitch and Moody’s.

Angry stakeholders

WGA faces several legal threats besides the one from Radiant Logistics.

A group of Western Global employees recently sued Western Global and Jeff Neff, the company’s principle owner and CEO, for sticking them with devalued shares after arranging debt financing at exorbitant interest rates for a 37.5% stake in the company.

On Thursday, Bloomberg separately reported that Neff recently bought the cargo airline’s highly distressed debt. The move, designed to stave off liquidation, has upset some investors who now are second in line for any claim on WGA assets. Loan holders get priority in bankruptcy proceedings over unsecured bondholders.

Those investors could potentially file suit seeking restitution for alleged fraud if Western Global files for bankruptcy, according to Bloomberg.

In 2019, logistics provider Flexport sued Western Global for substituting MD-11 aircraft for 747s called for in the charter contract because of maintenance delays.

Click here for more FreightWaves/American Shipper stories by Eric Kulisch.


Western Global Airlines grounds cargo jets as bankruptcy rumors swirl

The post Western Global Airlines sued for nonpayment of logistics services appeared first on FreightWaves.

Similar Posts

Leave a Reply