Nebraska Auditor Plans To Look Into Lincoln Airport Authority Over Red Way Airlines Failure

Aug. 25—Nebraska Auditor Mike Foley has notified the Lincoln Airport Authority that he plans to audit the use of $3 million in federal COVID-19 stimulus funds on a failed airline.

In a letter to airport Executive Director David Haring dated Friday, Foley said his office had "received concerns regarding millions of dollars in funding" to Red Way Airlines.

Red Way earlier this week announced that it will cease operations at the end of the month after less than three months in business.

As part of a deal to start new service at the Lincoln Airport in June, Red Way received a revenue guarantee backed by $3 million in leftover American Rescue Plan Act funds — $1.5 million each from the county and city.

The money was meant to be used to supplement startup losses the airline incurred in its first months. However, former airport authority board member Nick Cusick, who resigned last month, told the Journal Star the airline had already used more than $2 million in its first two months of operation. It's not clear whether it will be entitled to any more money.

Foley, in his letter, said his office will be auditing all funding received by Red Way and all expenditures made by the Lincoln airport authority on behalf of or in relation to Red Way's Nebraska operations.

In a statement, John Olsson, chairman of the airport authority, said the airport already had been planning to do its own audit of the Red Way operations, and the board, "looks forward to cooperating with the State Auditor, as well as our community partners — the Lancaster County Board and the Lincoln City Council — to coordinate all efforts to ensure a transparent audit process moving forward."

Red Way was a creative solution the airport came up with after having trouble finding another airline to start service at its newly remodeled and expanded terminal.

The airline was technically providing charter service through Global Crossing Airlines, although to customers, it looked and operated like a regular commercial airline.

Service began in early June to seven cities, and though the airline seemed to be doing well, flying more than 13,000 total passengers in June and July, it was apparently bleeding money.

Red Way used more than $900,000 from the incentive fund in June, and Cusick told the Journal Star it withdrew even more than that in July.

What was left "was deemed to be not enough to safely get them to the finish line," Cusick said, causing Red Way to make the decision to pull the plug.

In a Facebook post Wednesday, Red Way said it faced "insurmountable challenges as a small startup," and the "compounding of costs and lack of resources have made it impossible for us to sustain operations."

The Lancaster County Board of Commissioners issued a written statement on Wednesday, saying it "is deeply disappointed and troubled at this unexpected and sudden turn of events."

The board said there are "many unanswered questions regarding the Red Way project, (and it) looks forward to receiving a full accounting of this situation as the Lincoln Airport Authority charts a new path forward to serve our community."

Lincoln Mayor Leirion Gaylor Baird declined to comment on Wednesday.

Reach the writer at 402-473-2647 or [email protected].

On Twitter @LincolnBizBuzz.

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