News / Western Global Airlines' Neff family determined to fight 'damaging' law suit

Shareholders of Western Global Airlines (WGA), the Neff family, have come out fighting a class action claiming they had initiated an employee share ownership plan (ESOP) which had “drastically overpaid” for stock purchased from the family.

The plaintiffs claimed the Neffs had walked away with more than half a billion dollars after valuing the carrier at $1.3bn, which “far exceeds the fair market value”.

But the shareholders, in a 103-page response to the lawsuit, said they were acting in the best interests of staff.

They said: “The defendants … wanted to share ownership in the company at no out-of-pocket cost or any risk to the company’s employees, and not instead of any other employee benefits but in addition to, in order to increase employee motivation, engagement and retention so that the ESOP participants would be beneficial owners and on the same page and aligned.”

They claimed the lawsuit had “caused irreparable damage to the company and its employees”.

The shareholders explained that following the ESOP, they had transferred two aircraft leasing companies to WGA, which “owned hundreds of millions of dollars of aircraft assets that were leased to WGA for approximately $40m in annual lease payments by WGA” – thus saving the airline that sum each year.

They also noted that the amount the ESOP paid was “determined in good faith”, and that they had commissioned Brian Clancy of Logistic Capital and Strategy to determine the value of the aircraft it owned – 12 MD-11Fs and two 747-400BCFs – at $635m, which did not include spares and parts, among other things, including demand and supply.

The Neffs, and co-defendant Prudent Fiduciary Services, also claimed that the lawsuit had been “effectively strong-armed” by third-party lawyers who had solicited the case by sending advertisements to the homes of staff, three of whom agreed to file suit. One, however, withdrew shortly afterwards.

The shareholders have called for the case to be dismissed.

WGA is currently under Chapter 11 bankruptcy restructuring, following something of a perfect storm that saw the carrier hit by a shortage of pilots, customers impacted by China’s zero-Covid policy and additional costs due to the closure of Russian airspace – which all led to its downgrading by ratings agencies. It was forced to ground some aircraft.

It currently has 12 MD-11Fs parked, but six are operating. Three of its four 747-400Fs (two are leased) are also flying.