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.”