News

WFA closes doors to weather financial fight

By William Hoover
Anvil Herald Correspondent

Wright Flyers Aviation president Rand Goldstein reported Hondo’s international flight training academy closed its doors at Hondo Municipal Airport last week in an effort to obtain payment from its primary client in China. Having left New Braunfels and San Antonio International Airport, WFA was operating exclusively in Hondo.

“We shut everything down in San Antonio and New Braunfels,” said Goldstein. “We put all our chips on Hondo and now we are in a fight with our largest customer, Hainan Airlines, and its subsidiary, Tian Jin Airlines, to collect more than $1 million in training services. Our customer is not paying and not negotiating. I cannot continue to operate if I am not paid.”

For several months now, Hainan has refused to pay WFA for additional training services required for pilots from China to meet Federal Aviation Administration requirements for flight safety. When students fail an exam, they need to be retrained to take the exam, according to Goldstein.

“We have provided real training services, aircraft hours flown, and instructor time, required to meet FAA standards. But the airline is saying, ‘No, that is above and beyond the base contract and that is your problem’,” said the WFA president.

“We need to train pilots to FAA standards so they can pass the FAA test and become pilots. Hainan and Tian Jin knowingly came and took the benefit of services and products for training their students, who had gone back to China, and held up the contract, when in fact their students signed off on all of that work. You can’t knowingly take the benefit of economic activity and not have some responsibility. Up to now, they have denied 100% of any responsibility.”

Goldstein has sent invoices and has been in direct contact with the airlines and China’s version of the FAA, the Civil Aviation Administration of China.

“I understand the CAAC is going to meet with the airlines, which is not usual,” said Goldstein. “Hainan has worked with at least three other North American flight schools that went bankrupt.”

The WFA president laid off 50 employees in Hondo on July 20, less than three months after the academy began operations in Hondo. He has also retained a lawyer in an attempt to collect the funds from Hainan.

“I had to furlough all of my employees for two reasons: to conserve cash to buy time to fight this battle; and, to show the airlines this is not a financial negotiation,” he said. “This is the completion of the student training. I’ve contacted an attorney in Washington, D.C. who not only sued but successfully got a judgment and settlement payment from Hainan for $15 million.”

This is not the first time Hainan has refused to pay for contracted services, Goldstein said. The $15 million settlement, which took five years to secure, occurred several years ago after Hainan reneged on a contract with San Antonio-based aerospace firm Fairchild Dornier. The San Antonio aerospace firm, which had been contracted to supply airplanes to Hainan, went bankrupt in 2003. Goldstein hopes his lawyer can convince Hainan to pay for the flight training services WFA employees have provided to student pilots from China.

“Hainan reneged on that contract and wound up paying $15 million in the United States. Even though it’s a Chinese airline, they have assets in the U.S.,” he said. “I am also trying to get the attention of the airline by letting them know I am not going to let students lose their opportunity and let employees lose their jobs.”

If Hainan refuses to pay WFA, the flight training company would be in jeopardy of folding, according to Goldstein, who says all his bills to contractors and the City of Hondo are paid up to date.

“I am looking at insolvency if I cannot solve this problem, so I am buying time,” he said. “The issue in my opinion is a contract dispute. I am fighting for my own financial existence, as well as that of my company. I’m not in Hondo because I’m working with my attorneys to see what I can do to collect this money.”

The closure of WFA also interrupts the flight training of over 100 students from China who are living in the Encinito Apartment complex. The students were supposed to graduate from flight training in September, but completing their training has been placed on hold until Hainan pays for the services it received from WFA. Still, Goldstein is looking at alternative operators who can provide pilot training services in Hondo using the WFA hangar.

“We continue to believe we can collect the funds we are owed,” he said. “I don’t know if it will be sooner or later, but I have not given up that effort. In the meantime, we are pursuing several other options to have flight training continue in Hondo.”

Mayor Jim Danner said he is hoping WFA is successful at collecting the money it is owed and continues its lease with the city’s 70,000 square foot hangar.

According to the mayor, the city and the Hondo Economic Development Corporation are not worried about the $60,000 the two entities invested in repair and refurbishment of the hangar used by WFA because the refurbishment was needed to lease the hangar, regardless of the tenant.

“We are praying WFA can work out their payment problems,” said Danner. “I understand Mr. Goldstein has had this problem for several months. If WFA does abandon its hangar lease, we should be able to line up another tenant. It is too good of a hangar facility to stay vacant very long. It had to be fixed up or we would have never been able to rent it.”

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