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Dirty Tricks From Whipsaw City, Act II

petebest

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From: Flex Jet LLC Director of Operations
Sent: Tuesday, March 24, 2014 10:32 AM
To: All_PIC; All_SIC
Subject: Communication From Renn Kicci, Chairman

Please read the following communication from Renn Kicci, Chairman:
TO: All Active and Furloughed Flex Jet Pilots
COMPANY MOST PRIVATE
I am writing to inform you of an important development. As most of you know, since like me you lived through it, our industry suffered a 30% drop in volume in 2009. This had significant impact on Flex Jet including downsizing our operations and furloughing our pilots. Today we still have 49 pilots on furlough. In an industry that is dominated by fixed overhead and high capital costs, this drop in volume caused the competition to lower pricing and compete aggressively on terms in an effort to make the best of a bad environment.
I had said many times that after 2009, we suffered from too much capacity and it would be difficult to grow until capacity (defined as the number of aircraft trying to sell to our audience) was reduced and consolidated. This has been the cornerstone of my strategic vision. In the employee meeting in June of 2009, I said that one of our Company strategies would be to seek out strategic opportunities that would allow us to act as a consolidator in the industry. We have executed on this vision last year by buying Sentient, absorbing CitationAir?s assets and the announcement to wind down Flight Options. By making these strategic moves (along with Avantair?s collapse), we have been able to consolidate capacity in the fractional portion of our industry and put ourselves in a position to be the only true challenger to NetJets in that segment. I will have a lot more to say on this strategy as we get closer to the final closing of Flight Options, but suffice to say, that I couldn?t be happier with how we will be positioned in our industry in the next 18 months.
The new development is that we have also been working on a transaction to consolidate Flight Options remaining holdings into Flex Jet, just like we did when we folded CitationAir?s assets into Flight Options last year. As you know, we announced in late 2013 that Flight Options was exiting the fractional ownership market once its existing agreements expire. Subsequently, we have been systematically moving aircraft and customers from Flight Options to Flex Jet, while shrinking Flight Options and laying off their personnel including the majority of their pilots. Because Flight Options is now only a fraction of the size of Flex Jet, we are not planning to integrate operations. Instead, we will continue to wind down the operations of Flight Options over 9 months by gradually transferring its remaining aircraft to our Flex Jet fleet, taking over 300 customers of Flight Optons and giving us an additional 18,000 hours of annual flying. Because we will follow the pattern we set with CitationAir, we will not be hiring Flight Option?s pilots or integrating seniority lists, the new aircraft and flying will allow us to bring all of our remaining furloughed pilots back to work as well as providing upgrade opportunities to many of our active pilots along with hiring a substantial number of new-hires (not to include any former CitationAir or Flight Options pilots). The transaction could close as early as April 1st.
We are not insensitive to the situation of the Flight Options pilots but the unfortunate reality is that they will be out of work within 18 months regardless of whether we acquire the company or not. We also plan to provide the Flight Options pilots with benefits that include:
1. Significant severance for all their pilots commensurate with the compensation terms of being furloughed
2. Retention bonuses to help assist with flying through the transition period
3. Training bonuses for assisting with the safe transition of our flight crews.
Just like I stated during the CitationAir acquisition, I am not offering, nor am I willing, to integrate the Flight Options seniority list with the Flex Jet seniority list. It is regrettable Flight Options was unsuccessful in the market place once the superior product line of Flex Jet came under our management. I find it hard to think about the idea that pilots, even those currently employed by our sister company, would somehow get priority over our own group of furloughed pilots who have been loyal to Flex Jet and could now benefit from that loyalty. As you know, one of the fundamental principles of Flex Jet is to treat our employees as family and the time is quickly approaching when we will be able to help ourfamily. I have been waiting and working for more than 6 years to get to this point.
I am confident that the Flight Options pilots will fully understand my position, sine they so eagerly supported me last year when I did the same thing to the CitationAir pilots that I am now doing to them. Therefore, CEO Mike Silvestro has sent the IBT a letter explaining our position, along with a proposed agreement with the IBT, which I am confident will be signed. You may recall, the IBT eventually signed a similar LOA during the CitationAir acquisition in reaction to intense pressure to do the deal with us that came from both the active and furloughed Flight Options pilots. To avoid any misunderstanding or mischaracterization of our position, I have enclosed a copy of that letter so you can see the terms for yourself.
I anticipate the 1108 will feel no more of an obligation to the Flight Options pilots than the Flight Option pilots felt to the CitationAir pilots when they were in control; what goes around comes around. I applaud the 1108 for having made the correct choice in the past and am confident they will do so again. As with the CitationAir acquisition, I feel the obligation to protect the Flex Jet pilots is so paramount that I will not complete the Flight Options transaction if it could have a detrimental effect on the Flex Jet pilots.
Finally, we just came to terms with Flight Options on this transaction on Friday and I only have until March 28, to let them know if we will close. Given the tight time frame, we have opened a discussion blog that will answer any additional questions through Thursday evening. This blog will be on the pilot website at http://pilots.flexjet.com and you can access it by using your Flex Jet username and password and clicking on?Company News? at the top of the left menu.
As a reminder, the company did sign a confidentiality agreement not to disclose to those without a need to know, any information surrounding the transaction with Flight Options. Rumored information can often sabotage a deal. This is common in business and why many times we do not acknowledge a transaction during the negotiation phase. However, I see no need to keep this information confidential any longer?our experience during the CitationAir acquisition has shown that this kind of information will get out almost at the speed of light. Consequently, I hope you will openly discuss this matter outside our pilot group. The Flight Options pilots need to hear about the position I have taken regarding their future?even if it comes to them via the rumor mill while we are waiting to see how it will play out.
Finally, I do want to say that it is exciting that we have these questions and issues to ponder and discern. Growing the company again, strategizing about our future and thinking about bringing people back to work, are certainly more enjoyable issues to debate than the issues that have challenged us these past 5 years.
Thanks again for all you do and taking the time to consider the impact of this issue.
Renn Kicci
Chairman
Attachments:
1. Letter from Flex Jet to IBT 1108
2. Proposed Letter of Agreement
 
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jetwash

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Someone took a lot of time to create animosity between pilot groups.

Hopefully some of the Flight Options pilots who wanted to jump at the Citation Air offer will understand now why the decision was made as it was.

I don't think this was meant to offend or worry the Flex guys it was more for the impulsive Options pilots who are thinking only short term.
 

Club ORD FO

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In all seriousness, what has the Options IBT response been to the Flexjet deal? Do you/they plan to fight the plan to keep us two separate companies?

By the way, all the options pilots we have met on the road have been great and very welcoming. We are all just sitting over here wondering if the accusation will go as smoothly as our management says it will.
 

jetwash

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In all seriousness, what has the Options IBT response been to the Flexjet deal? Do you/they plan to fight the plan to keep us two separate companies?

By the way, all the options pilots we have met on the road have been great and very welcoming. We are all just sitting over here wondering if the accusation will go as smoothly as our management says it will.

All the guys I talked to think it is great. We all hope you keep your pay so that we can ask for the same during the next round of negotiations.

Seeing as the IBT1108 followed the MaCaskill-Bond act in the Citation Air deal I am sure they will probably do the same in the Flex/Options .

As for merging the two groups we will have to see what the situation looks like after the deal closes. While the products might be marketed differently they might end up being the same under the surface.

Just look at the Chrysler Dodge Caravan and Volkswagon Routan which are from two different companies but built in the same factory on the same assembly line by the same workers. The only difference beside the name plate is you get to pay a few thousand more for the Volkswagon since it has a foreign sounding name.
I see that as the eventual situation between Flex/Options since the customer will only see the final product.
 
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luckydog

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I have yet to see Flight Options mentioned as an owner or merger partner in the announced Bombardier sale yet you keep assuming Flight Options is the entity buying Flex. Where do you get your information?

The question both pilot groups want answered is will the companies remain separate?

Until that question is answered you're getting way ahead of yourself figuring out integration issues and how the IBT acts.
 

Club ORD FO

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Uh, Ricci standing in our company conference room saying DAC is buying flexjet is where i get my information. He has said that he wants to keep the two companies completely separate. So technically options is not buying Flex, DAC is.
 

luckydog

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Uh, Ricci standing in our company conference room saying DAC is buying flexjet is where i get my information. He has said that he wants to keep the two companies completely separate. So technically options is not buying Flex, DAC is.

I agree with you completely, I heard him say the same thing. My point was that Jetwash keeps saying Flight Options is buying Flex and as you pointed out, there is difference.
 

jetwash

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I agree with you completely, I heard him say the same thing. My point was that Jetwash keeps saying Flight Options is buying Flex and as you pointed out, there is difference.

Kenn says a lot of things, some he means some are just thrown out there. Ask some of the Flight Options pilots who have flown him before. I have on a few occasions. He is a very carasmatic figure, he will make you feel good after talking to him. He makes it a point to come up to the cockpit and talk to the pilots every flight and ask about your concerns, he then asks if you have any questions he talks openly and answers your questions. He throws out answers some of which are meant to be spread amongst the pilot group as rumors.
A good indication what will happen is if he moves you office people to Cleveland.

I too a few years ago stood in a conference room in CGF and listened to Kenn tell the pilots that they will be the best paid in the industry and the Gulfstreams are on their way. I am glad I didn't hold my breath and I encourage you guys not to either. Look at the letter he sent out regarding the Citation Air deal. How he complimented us and described us as part of his family and how he wants to take care of us. Then look at our pay and 401k and ask yourself did he mean it or was it just lube job.

To put it simply I am glad he is our owner since he is a capable businessman. Do I trust him? NO!
 

gret

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Don't know the man, but have heard a lot about him from people in the industry...some good...some bad.

He has been able to run the business in a way to survive the downturn and is now picking up assets (hopefully at favorable prices) that he and the other stakeholders (including employees) hope will be a stable and profitable player in a very tough business. They have done this without the deep pockets of BK, or a manufacturer.

Shouldn't the FO group be a bit proud that they are a survivor and see how things turn out before degrading the company they work for and seems to be making some pretty good moves?

FO is not buying Flex...DAC is! Silly to keep saying otherwise.
 

luckydog

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To put it simply I am glad he is our owner since he is a capable businessman. Do I trust him? NO!

I really don't trust any mgmt team to be looking after my best interests, that's just good common sense!

Lets wait for a few more rain drops to fall before declaring a NOTAM that the sky is in fact falling.

The details aren't out to the employees and as far as I know, no one from the Waterview is looking for a house in Cleveland. I know it's difficult, but let's give this some time.

Personally, I don't think KR is done moving his pieces around the board.
 

GlorifiedCabbie

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"A good indication what will happen is if he moves you office people to Cleveland."


Did you know they were remodeling the offices on the second floor at CGF?
 
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luckydog

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So you're saying they already have a facilities plan for a transaction that hasn't even closed?

It's time to go to DEFCON 2.

Did you know they just renewed the lease and remodeled at the Waterview?

Maybe it means something maybe not.
 

jonjuan

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You know as pilots we are not allowed to do outside commercial flying as it is competing with our employers ...

But our employers are able to compete against us? By purchasing other commercial flying concerns?

No ones stopping you from being a Starbucks barista on your days off.
 

CL300Pilot

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So, I have a question for those at Options who "can't wait to staple" flex pilots to your seniority list. While I realize the comment I made above is a limited group of the outspoken, why would you want the same size group as yours currently to be sucked in knowing that 60 to 70% of them don't want to be part of a union and would be so angry over it that it would throw an almost immediate move to decertify the 1108? Also, didn't your union vote barely pass or was that CS? If it did barely pass, why would you think that the group at Flex, who by the way on 3 or 4 separate occasions said no thanks to even bringing it to a vote, would not move to decertify?

Dog is correct. We all just need to watch and see what happens. Based on you scope clause, the fact that Flex is not an air carrier and the fact that it is DAC who bought us and not Options just solidifies my personal opinion that we, as KR stated, will continue to be operated separately as companies.

Only time will tell who is correct or not. However, I will, gladly buy an adult beverage for our new "brothers/sisters in law."
 

shanes123

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So, I have a question for those at Options who "can't wait to staple" flex pilots to your seniority list. While I realize the comment I made above is a limited group of the outspoken, why would you want the same size group as yours currently to be sucked in knowing that 60 to 70% of them don't want to be part of a union and would be so angry over it that it would throw an almost immediate move to decertify the 1108? Also, didn't your union vote barely pass or was that CS? If it did barely pass, why would you think that the group at Flex, who by the way on 3 or 4 separate occasions said no thanks to even bringing it to a vote, would not move to decertify?

Dog is correct. We all just need to watch and see what happens. Based on you scope clause, the fact that Flex is not an air carrier and the fact that it is DAC who bought us and not Options just solidifies my personal opinion that we, as KR stated, will continue to be operated separately as companies.


You Sir are in for a rude awakening. I dont know how Flex MGT operates but im guessing your quality of life and CULTure is about to change dramatically..I was never a Union supporter but this MGT made me a believer..You are in for a tailspin that you will not be able to recover. And theres 3 types of pilots at Flops 1. the asskissers 2. to scared to tell you there true feelings for fear of retribution ( because its happened) 3. the ones that wont be intimidated and dont kiss ass. those are few..Good Luck
 
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