Western Global Airlines LLC, a seven-year-old air carrier with about 400 employees that serves clients such as United Parcel Service Inc. and Amazon.com Inc., picked up new orders as passenger airlines cut their cargo capacity and consumers flocked to online shopping.
The Estero, Florida-based company raised about $400 million in the corporate bond market. The borrowing did not come cheap at an interest rate of over 10%, but it let the co-founders and other shareholders cash out a minority stake in the company.
Western Global also received plenty of support from the government: $8.2 million via a PPP loan in April and $34.8 million starting in June through a program for the aviation industry run by the U.S. Treasury.
Western Global didn’t respond to a request for comment.
When asked for comment for the story, a Fed representative referred to an Oct. 20 speech by Daleep Singh, executive vice president at the Federal Reserve Bank of New York. Singh said the Fed's $13 billion of corporate bond purchases helped firms maintain jobs and prevented defaults. Companies that accessed the bond markets since March employ more than 16 million people, he said. The Small Business Administration declined to comment.
Any concentration in market power could exacerbate disturbing trends in the U.S. economy that already emerged as a result of a decline in competition, according to an August paper by two Federal Reserve Board economists. They identified deepening inequality and financial instability as a result of larger firms controlling more of their markets.
A study published by the New York Fed in August found that Black-owned firms have been almost twice as likely to shutter during the pandemic compared to all others. About 41% of Black- and Latino-owned business said they won’t make it through the next few months without additional financial support, according to a Small Business Majority survey released on Oct. 20.
Entrepreneurs are a resilient bunch, and data show that Americans have created new businesses in surprisingly high numbers in the third quarter. It remains unclear how many will take off.
Frank Knapp, 68, whose family owns a dog-boarding business in Columbia, South Carolina, got PPP relief money in a second round to help stay afloat, after his local bank at first refused because it wasn’t comfortable with the program and risks. He worries small businesses that go away will simply be replaced by larger competitors.
“The customers they were serving aren’t doing without,” Knapp said. “They are going to get their service from a bigger business that survived.”
--With assistance from Tom Keene, Lisa Abramowicz, Mark Niquette and Olivia Rockeman.
This article was provided by Bloomberg News.