Acquisition by Arcadia closes book on Wayfarer

 - June 28, 2010, 11:57 AM

On June 11, charter/management company Wayfarer Aviation received bridge financing from Arcadia Aviation to continue operations, then four days later Arcadia president Robert Garrett announced that it had signed a purchase agreement to buy Wayfarer Aviation.

According to Arcadia, all of Wayfarer’s clients were contacted and told that the Wayfarer operations team would continue working and that the two companies–both Argus Platinum rated and IS-BAO registered–would be combined. Part of the reason for buying Wayfarer, according to Garrett, was to add the company’s 10-or-more-seat charter certificate to Arcadia’s operation. He said the combined companies will be operated under the Arcadia name.

Headquarters of the company will remain in New York City, but Wayfarer’s operations center in Weymouth, Mass., will be retained. Arcadia also owns FBOs at Sullivan County International Airport in New York and Eastern West Virginia Regional Airport near Martinsburg, W. Va., where it also operates a Part 145 repair station.  

Wayfarer Aviation’s final chapter began a week before the June 11 announcement that it would be acquired by Arcadia Aviation, according to Robert Pinkas, founding partner of investor Brantley Partners. “The company had been making great progress,” he told AIN. “But [Brantley Partners] got into a position where our ability to fund the business was taken away from us.” Pinkas would not explain how this occurred, but added, “We are no longer on the board and no longer involved on a day-to-day basis. We had every intention of continuing. It’s confidential, and I can’t go into details.”

Wayfarer Aviation was formed last year after buying assets of bankrupt JetDirect Aviation, which filed for liquidation on May 1, 2009. JetDirect had attempted to build a nationwide charter/management company by buying nearly a dozen charter firms–including assets of Tag Aviation USA and Regal Aviation, Sunset Aviation, The Air Group, Spirit Aviation and others–but the timing turned out to be disastrous, with the complex consolidation of those companies and the 300 aircraft in the combined fleet still under way as the economy faltered in 2008.

Private equity firm Brantley Partners of Beachwood, Ohio, one of JetDirect’s financial backers, resurrected the Wayfarer name when it formed Wayfarer Aviation. Tag Aviation USA had purchased Wayfarer Ketch (at its outset the Rockefeller flight department) in 1999. The new company promised to repay former JetDirect management clients who signed up with Wayfarer the money that they were owed by the previous company. Some owners were owed hundreds of thousands of dollars because they had prepaid insurance and other fees. Those that didn’t move their aircraft to Wayfarer received none of the money they were due.

Employee Lawsuits Pending

Hundreds of former JetDirect employees and vendors were also never repaid money they were owed for salaries, unreimbursed expenses, unpaid benefits and services provided. In some cases, JetDirect pilots had paid for fuel on their personal credit cards to be able to fly home after a trip when FBOs refused JetDirect credit cards.
And many former JetDirect employees complained that funds automatically withheld from paychecks for benefits such as retirement savings plans or medical coverage never were deposited but used by JetDirect to pay for ongoing expenses.

In an amended complaint filed on May 6 against JetDirect and Wayfarer Aviation, former JetDirect employees assert, “830 employees have been victimized by this egregious conduct.” The alleged conduct, according to the complaint, “arises out of the fact that, for at least several months, JetDirect has withheld money from its employees’ paychecks that is intended to fund the employees’ 401(k) plan, health insurance, life insurance, disability insurance and flexible spending plans, yet has failed to deposit the withheld funds into the proper accounts.”

The complaint seeks certification of the lawsuit as a class action, a ruling that
the defendants violated and engaged in prohibited transactions under the Employment Retirement Income Security Act and an award for legal costs and replacement of the lost funds. In an answer to the complaint, the defendants refute the accusations and ask for relief. “Defendants deny that plaintiffs are entitled to any of the orders, awards or other remedies set forth in the Prayer for Relief.”

Pinkas said that Wayfarer did not leave any vendors unpaid before it was sold. “We’re doing things right,” he said, “and winding things down.” Wayfarer had “made great progress” in paying off the former JetDirect management clients who stuck with Wayfarer, he added.

The sale of Wayfarer Aviation marks the final chapter in the long history of charter companies that became part of the JetDirect portfolio. Some of the companies that JetDirect purchased were never fully paid for, including the assets of Tag Aviation USA and Sunset Aviation.