July 7, 2023

Western Global pilots pursue 1st union contract amid financial turmoil

Western Global Airlines cargo pilots, who are negotiating their first collective bargaining agreement, say a contract with terms and conditions in line with industry standards is necessary to reverse a crew shortage that is hampering operations and help the struggling company stay in business.

Union leaders told members in a message last week their goal is to jointly create a competitive contract that attracts pilots and serves as a springboard for restoring the company’s health but that management’s opaqueness about financial conditions makes that difficult.

A letter from founder and CEO Jim Neff discussing media reports about potential bankruptcy and the decision of Moody’s and Fitch to withdraw credit ratings did little to reassure employees because it lacked specifics, the union’s Master Executive Council said.

“Despite being a substantial base of the employees and despite Mr. Neff’s assertion that employees are owners, the company has excluded the pilots from the process by capitalizing on the fact that we do not have a collective bargaining agreement. The company’s lack of transparency limits our ability to function as a resource in the process on behalf of the pilot group,” the union representatives said in the message. 

Western Global Airlines’ pilots selected the Air Line Pilots Association as their bargaining representative in 2021.

A former employee, who spoke on condition of anonymity, said Neff has worked hard to undermine and divide the pilot group.

“He is doing just enough in negotiations to fend off arbitration, but there’s been very little progress on an initial contract. The owner tries to blame this lack of progress on the union,” the pilot told FreightWaves. “He has his anti-union followers ask union supporters why they’re paying dues if the union can’t get a contract.”

Western Global officials did not respond to multiple voicemail and email messages seeking the company’s side of the issue.

Executive Council members said they are working to help Western Global become a career destination for pilots instead of turnstile on the way to other companies, specifically cargo airlines where most workforces are unionized. 

FedEx pilots are voting this month whether to approve a tentative contract that includes a 30% pay raise. Amerijet, another midtier cargo airline based in Miami, in late June finalized a contract that raises pilot pay up to 45%. Passenger airlines WestJet and Hawaiian Airlines, both of which have fledging freighter divisions, this year also completed labor deals with their pilots. UPS pilots ratified a two-year extension of their current contract last fall.

The alert sent to members, and reviewed by FreightWaves, says Western Global Airlines needs to attract pilots to serve cargo customers and make money.

“It is no secret that the company is experiencing staffing challenges. Without qualified pilots who can complete the work and ensure client satisfaction, the company, even if reorganized, will continue to ride the wheel of financial shortfall. While it is undeniable that we are in this together, the pilots, as a bargaining unit, must be proactive about the situation and to the extent possible be prepared to respond to whatever comes next, whether it be the preferred scenario in which management can maintain the Company as a going concern or one in which they must file for bankruptcy,” said council leaders.

The lack of a collective bargaining agreement is a key reason WGA, which is believed to have low pay scales compared to competitors, is having difficulty attracting and retaining pilots, according to the member alert.

“Instead, Western Global currently functions as a pass-through employer, where pilots make a short stop, before moving on to other companies such as FedEx, Kalitta, United, Delta, etc. Our desire is to work with management to support the success of the company by helping it become a career airline,” said council leaders.

Moody’s and Fitch, in recent reports explaining why they downgraded WGA’s debt to non-investment grade, listed a lack of pilots as a reason for a steep reduction in revenues and cash flow.

“In the second quarter [of 2022], fuel expenses increased because the company was unable to transport cargo on its westbound routes to Asia due to it not meeting minimum requirements for the number of pilots operating the aircraft,” Moody’s said.

Cash Crunch

Other contributors to the liquidity crisis at Western Global include a sharp downturn in air cargo demand as the global economy slows, the loss of Amazon (NASDAQ: AMZN) as a key customer in January, heavy debt loads and an aging fleet that is expensive to maintain and operate. At one point during the past couple of years about 75% of Western Global’s flying was for Amazon, the former employee said.

WGA has a fleet of 21 tri-engine MD-11s and quad-engine 747-400s. Flight tracking sites show most of the fleet is currently parked. 

During the spring, WGA canceled an order with Boeing for two 777 freighters.

Neff is also is battling two lawsuits from a former vendor and its own employees. Radiant Logistics is suing WGA for more than $750,000 in back payments and interest for aircraft components it shipped to WGA. On Thursday, a judge in the U.S. District Court for the Western District of Washington set a trial date for May 6, 2024. 

Meanwhile, employees in a class action suit allege Neff illegally acted in his own interests by selling them more than a third of the company at a highly inflated value through an employee stock ownership plan and then loaning them money for the purchase with bonds procured at above-market interest rates, immediately saddling them with devalued shares. The suit was filed by employees, who are trying to save the company, specifically against Neff, his wife and their fiduciaries.

The union said it has tentatively agreed with management on 10 sections of the pilot contract, including terms for furloughs and recalls, discipline and discharge, grievances and seniority. The bargaining committee last week met in Orlando, Florida, to draft a proposal on compensation and other economic benefits.

“Despite the current circumstances … we remain dedicated to good-faith negotiations to reach an agreement and hope the company shares our commitment,” the Master Executive Council said.

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

Twitter: @ericreports / LinkedIn: Eric Kulisch / [email protected]


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