‘A failed riverboat gamble’: Nebraska auditor slams Red Way ‘debacle’

LINCOLN, Neb. (KLKN) — Nebraska State Auditor Mike Foley says Red Way lied about refunding customers.

In his audit released Thursday, Foley alleges that the defunct airline falsely certified that customer refunds were made in order to withdraw $340,000 from its escrow account.

The report says the airline used that money to pay expenses, rather than to reimburse customers, a violation of federal regulations.

Foley called Red Way a “debacle” and said it continues to withhold refunds from customers. He estimated that they may still be owed more than $100,000.

After less than three months of flights, Lincoln’s Red Way airline shut down at the end of August.

The report shows that only one out of 274 flights was profitable.

The plan presented to the Lincoln Airport Authority projected $8.8 million in ticket sales over three months, according to the report, but ended with only $2.2 million in revenue.

“In the final analysis, Red Way was a failed riverboat gamble bankrolled by taxpayers,” Foley said.

Red Way received $3 million in American Rescue Plan Act funds, made available by the Lincoln City Council and Lancaster County Board.

Foley said the airline received an addition $700,000 in local taxpayer money.

“This is an example of public officials spending money as though it’s Monopoly money, play money, and wasting it in a very dangerous and failed riverboat gamble,” Foley said.

Foley said Red Way was not certified to operate in Nebraska.

The airline was run out of the Colorado home of a former consultant to the Lincoln Airport Authority “with little more than a website and one chartered plane,” the report says.

In a statement, the airport authority said it appreciated the state auditor’s efforts to shine light on the Red Way operations.

“We agree with the Auditor’s conclusions that Red Way management withheld vital information from the airport, customers and federal authorities,” the statement says. “We will continue to review the Auditor’s recommendations and in fact have already begun to shore up processes and procedures after we conducted our own audit.”