Avantair Management Takes Pay Cut, Grants Stock Options

AINalerts » September 13, 2012
September 13, 2012, 4:00 PM

Avantair, the fractional-share operator of a fleet of 56 Piaggio Avanti twin turboprops, has adjusted its payscales to better match the rate of growth of management fees, company CEO Steve Santo told AIN. Management fees generally grow at the rate of the consumer price index (CPI), but raises during certain years were climbing faster than the CPI, making it difficult for Avantair to keep expenses in check.

The new-hire and 10-year pay rates haven’t changed, he explained, while some rates were adjusted to match management fee growth. To remunerate employees for the changes, Avantair is granting stock options to all employees; the options vest in three years.

Santo and president Stephen Wagman also took voluntary pay cuts of 15 percent and 6 percent, respectively, according to Avantair’s August 24 SEC filing, and agreed to forego 2012 bonuses, “in furtherance of their continued actions as part of the company’s ongoing efforts to reduce expenses.” Non-employee directors agreed to reduce their compensation by 40 percent. Avantair’s stock closed yesterday at 53 cents per share.

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Ryan
on September 14, 2012 - 10:30pm

In addition to cutting the pay scale, management has cut the pilots' total holiday/vacation days down to one week per year and cut their per diem pay in half, from $2/hr to $1/hr. The accounting department has been whittled down and the pilots do their accounting at the end of the work week, during their time off. Each pilot must go through all their receipts for hotels, rental cars, etc., rectify them with their credit card statement, correct any discrepancies or overcharges by the hotels or rental car companies with those companies, copy everything and send the accounting for the week to Avantair management. Accounting for fuel costs has also been added to the pilots' responsibilities throughout the work week.

The fleet is aging and has constant maintenance issues. Several aircraft are grounded due to accidents or other mechanical problems, which puts strain on the remaining fleet. The pilots are working maximum duty time and getting minimum rest. The company positions their flights so the 'passenger carrying legs' under Part 135 are completed within the 14 hours "scheduled" duty time (which often goes over 14 hours), and then they tack on repositoining legs under Part 91, which make the duty day even longer - but still "legal" under Part 91.

The Chief Operating Officer, Kevin Beitzel, resigned and pilot morale is very low. Many, if not most pilots, are looking for other employment so they can quit. No matter how you try to spin it, the ship seems to be going down.

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