Dirty Tricks From Whipsaw City, part 1

[Vinny]

Ladies and Gents,

Here is the latest communication from Mr. Kenn Ricci, Chairman, Directional Aviation Capital:

September 24, 2013

To: All Active and Furloughed Flight Options Pilots

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 Flight Options including downsizing our operations and furloughing our pilots. Today we still have 185 pilots on furlough. In an industry that is dominated by a 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 by buying Sentient last year and the announcement to purchase Flexjet. 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 Flexjet, but suffice to say, that I couldn't be happier with how we will be positioned in our industry in the next 18 months.

(continued)

 

[Vinny]

Dirty Tricks From Whipsaw City, part 2

The new development is that we have also been working on a transaction to acquire Citation Air, which announced in 2012 that it was exiting the fractional ownership market once its existing agreements expire. Because Citation Air is only 20% of the size of Flight Options, we are not planning to integrate the operations. Instead, we will continue to wind down the operations of Citation Air over 9 months by gradually transferring 19 of its aircraft to our fleet, taking over 200 customers of Citation Air and giving us an additional 12,000 hours of annual flying. Because we will not be hiring Citation Air's pilots or integrating seniority lists, the new aircraft and flying will allow us to bring as many as 85 of our furloughed pilots back to work as well as providing upgrade opportunities to many of our active pilots. The transaction could close as early as October 1st.

We are not insensitive to the situation of the Citation Air pilots but the unfortunate reality is that they will be out of work in 18 months regardless of whether we acquire the company or not. We also plan to provide the Citation Air 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.

(continued)

 

[gutshotdraw]

"My strategic vision..."

Humble guy, ain't he?

 

[Vinny]

Dirty Tricks From Whipsaw City, part 3

I am not offering, nor am I willing, to integrate the two seniority lists. IBT furlough policy requires integration on a date of hire basis, which would put many Citation Air pilots who will lose their jobs within a few months ahead of active Flight Options pilots and would preclude recalls of Flight Options pilots. It is hard for me to think about the idea that pilots employed by our competitors, who were not successful in the market place, would somehow get priority over our own group of furloughed pilots, who have been loyal to Flight Options and could now benefit from that loyalty. As you know, one of the fundamental principles of Flight Options is to treat our employees as family and the time is quickly approaching when we will be able to help our family. I have been waiting and working for 5 years to get to this point.

I believe that our plan is consistent with our obligations under both the existing Flight Options IBT collective bargaining agreement and federal labor law but I am not willing to enter into the transaction only to end up in arbitration or litigation with the IBT. Therefore, CEO Mike Silvestro has sent the IBT a letter explaining our position, along with a proposed agreement with the IBT. 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.

(continued)

 

[BlueNose]

As you know, one of the fundamental principles of Flight Options is to treat our employees as family and the time is quickly approaching when we will be able to help our family.

I guess red-headed step children count as "family." How about restoring the 401K match that the rest of the DAC "family" has had for several years now?

 

[Vinny]

Dirty Tricks From Whipsaw City, part 4

I understand that 1108 feels an obligation to the Citation Air pilots. I applaud them in this mission. After all, they were asked to represent and bargain on behalf of the Citation Air group. Were Citation Air proceeding as a going concern, this would make sense. But, I feel the obligation to protect the Flight Options pilots is so paramount that I will not complete the transaction if it could have a detrimental effect on our pilots.

Finally, we just came to terms with Textron on this transaction on Friday and I only have until September 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.flightoptions.com and you can access it by using your Flight Options 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 Citation Air. 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 weighed this risk with the importance of our pilot group needing to understand this issue; and, trust you with this information. I hope you will keep it confidential and not discuss it outside our pilot group. As a company, we have given our word on this. Also, it would be unfair to the Citation Air pilots to hear rumors about their future. They are entitled to full explanation of their future once we are certain how it will play out.

(continued)

 

[Vinny]

Dirty Tricks From Whipsaw City, part 5

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 out 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.

Kenn Ricci
Chairman

Attachments:
1. Letter from Flight Options to IBT 1108
2. Proposed Letter of Agreement

(end)

 

[C680]

Loyalty Rewarded.

It is hard for me to think about the idea that pilots employed by our competitors, who were not successful in the market place, would somehow get priority over our own group of furloughed pilots, who have been loyal to Flight Options and could now benefit from that loyalty.
(continued)

There is no substitute for loyalty.

Good luck Tricky Dicky.

 

[brokeflyer]

so much for confidentiality mentioned in the last paragraph...

pilots should only be allowed to fly, nothing else.

 

[Pervis]

so much for confidentiality mentioned in the last paragraph...

pilots should only be allowed to fly, nothing else.

I was thinking the same thing. Good thing this is a secure, anonymous message board.