Wexford Capital is back, and that’s a name you might remember from the past. The company is a bottom-feeding private equity investment firm that has put money into a variety of airlines when they’re bankrupt or restructuring. They’ve now one it again with Silver Airways, but this was certainly a different kind of deal. Instead of trying to fix the airline at this point, it decided the parts were worth more than the whole. And now Silver will not fly again.
Based on that first paragraph, you might think I strongly dislike Wexford, but that’s not really the case, especially in this situation. Yes it’s a bottom-feeder, but somebody needs to deal with the companies at the bottom. And Silver? Oh it was so deep in the bottom that it had no other chance at survival. Anyone else could have stepped in to save the airline, but nobody wanted it. There really was no saving Silver.
Wexford does have quite a past. Just look at some of its deals. There are probably more that I’m missing.
- 1995 – Wexford bought MarkAir’s assets out of bankruptcy
- 1997 – Wexford loaned Frontier money to add more aircraft
- 1998 – Wexford bought Chautauqua, then soon after Shuttle America, and later that all became Republic
- 1999 – Wexford invested in the start-up of National Airlines, which failed in 2002
- 2005 – Wexford and Republic put money into US Airways coming out of bankruptcy in 2005
- 2008 – Wexford put money into the recently-bankrupt Azul
- 2020 – Wexford bought the remains of Via Air and moved that certificate to Alaska
- 2021 – Wexford did a joint venture with Sterling and Alaska Seaplanes to create Aleutian Airways, picking up the slack after the failure of PenAir
That’s a lot of activity, and while most of those may not have ended well, the Republic deal was probably its most successful. You can loop the US Airways funding into that since it came through the existing Republic relationship anyway.
With Silver, Wexford actually put in a little over $5 million in debtor-in-possession financing to keep the airline running when it filed for Chapter 11 bankruptcy reorganization. It was sniffing around and looking to do more with it. Eventually Wexford put in a so-called “stalking horse bid” of $5.775 million. What that means is it was supposed to be the floor, the opening volley in an auction. The problem is… nobody else wanted in. Silver was such a mess and so full of debt — especially after acquiring all those new ATRs — that Wexford was the only one there to try to fix this mess.
An article in The Virgin Islands Consortium suggests that Wexford actually planned on bringing the company out of bankruptcy and still flying as an airline, but that plan went off the rails in the last week.
…the temporary grounding of the airline’s fleet over the weekend of May 30 triggered a fast-moving sequence of events that left continuing operations impossible. The temporary cessation of flights, which in and of itself cost Silver approximately $1 million, led to weakened forward bookings. By the end of last week, the airline was out of cash.
As that article noted, the judge in the bankruptcy hearing seemed less than pleased with Silver’s management. “I’m speaking directly to [Silver CEO Steve] Rossum here. I place a lot of the concern here on how this company was managed, and I don’t think it was managed well.”
So… yeah. At that point, there was nothing left to do except try to salvage anything from the ashes. So Wexford picks up a variety of assets including the airline’s certificate. The airline’s eight airplanes probably go back to the lessors, but that’s not entirely clear to me. Maybe they try to restart this thing as a new company using that same certificate. But my bet is that won’t amount to anything. Those people flying to the Bahamas will need to just rent a speedboat and those going to Tallahassee, well, there’s always Greyhound. The only potential bright spot here — and that is being generous — is what happens with Seaborne.
Silver purchased Seaborne Airlines in 2018 to do more Caribbean flying. It eventually had its own ATRs in the market, but Seaborne still operated smaller Dash-6s under its own name. It looks like Seaborne is now flying just one airplane between St Thomas and St Croix.
The St Thomas Source — yes, I’m digging deep here, but they have the good info — got a statement from Seaborne saying that the one airplane will keep flying (most days) and the plan is to sell the company off by August 1.
Maybe you will see flying pink flamingoes haunt your dreams, but I don’t imagine we’ll see Silver’s taking to the actual sky again, except as a positioning flight to return to the lessors. The airline’s last flight was Silver flight 56 which landed in Fort Lauderdale after a short flight from Tampa at 11:51pm on June 10. Fittingly, the airplane was running a couple hours late.
