Newsmakers 2002

 - January 8, 2008, 7:31 AM

It has been a turbulent year for the aviation industry: a stalled economy, company failures and bankruptcies, layoffs and furloughs, management changes, product-line overhauls, security regulations and new aircraft launches. What follows below are the people who shaped 2002, as chosen by AIN’s editors.

George “Rick” Adam Jr., founder and CEO, Adam Aircraft
Considering the current economic climate and the state of the aviation industry, it’s no wonder that many aircraft OEMs are playing it a bit conservative. After all, even some established business aircraft manufacturers are struggling to stay afloat, not to mention the mostly cash-starved startup companies.

And while Eclipse Aviation CEO Vern Raburn asserts his company is the only one taking any real risk in the aviation industry, he was challenged in late October when George “Rick” Adam Jr., founder and CEO of Adam Aircraft, announced the A700, an all-composite very light twinjet derivative of the company’s in-development A500 piston twin. The A500 made its first flight on July 11 and is expected to be certified in the first half of this year. Adam is developing both projects concurrently, a rarity for any startup aircraft manufacturer.

Before starting Adam Aircraft in 1998, Adam formed New Era of Networks, a technology company that was ranked seventh nationally among its peers in 1999 by Deloitte & Touche in its Technology Fast 500 list. As a captain in the U.S. Air Force, he served as launch crew officer in charge of the Real Time Computer Center (RTCC) at Kennedy Space Center for Apollo Missions 8 through 14.

According to Adam, an affordable business jet fills a huge void in the aviation market since there are approximately 20,000 cabin-class twin and turboprop aircraft whose owners are step-up candidates for the A700. With an introductory price of $1.995 million, the six-seat (pilot included) A700 will be positioned, price-wise, between the circa-$1 million minijets–the Eclipse 500 and Safire S-26–and the $2.6 million Cessna Mustang. Adam Aircraft plans to fly the first A700 in the second half of this year, with first customer deliveries in late 2004.

The A700, which will have a top speed of 340 kt, will be powered by two 1,200-lb-thrust Williams International FJ33s. The A700’s flight deck will include large flat-panel displays, airborne weather, TCAS and terrain displays.

Said Adam of the A700: “We are very proud of this extension to our product line. Our A500 piston twin  is selling well and we anticipate first deliveries this summer. The addition of the A700 business jet to our product line gives our customers a growth path and will attract new customers to the company.”

Bill Boisture, president, Gulfstream Aerospace
There he was on stage in Orlando, Fla., trading lines with a young actor playing a paperboy hailing the Wright brothers’ first flight. Then the curtain behind them opened to show seven large, glistening airplane models, and Bill Boisture, president of Savannah, Ga.-based Gulfstream Aerospace, promised the lad that the future of aviation, 100 years hence, would look like this.

This was not the Boisture most people know, but, in the opinion of many at the Marriott World Center Hotel, he did a credible job on that stage at Gulfstream’s NBAA 2002 reception. But seven Gulfstream models? Where did they all come from?

In reality, there was only one new “metal-cut” development product, the G150, a fuselage-widened derivative of the G100 (formerly known as the IAI Astra SPX) with a reworked nose. The rest involved rebranding, realign-ing and “re-optioning” of Gulfstream’s other models, effectively expanding its previous four-model product line–G100, G200 (former Galaxy), GIV-SP and GV-SP–to seven: G100, G150, G200, G300, G400, G500 and G550. Each model combines specific price/performance points with maintenance, training and other options, offering a “strategic product line expansion designed to provide alternatives to the market at different price points and with specific value [option equipment] packages,” Boisture told AIN. “We’re making our products and commitment to customer support available to more people.”

Two-and-a-half months after the announcement, Boisture said the response to the broadening of the Gulfstream product line has been “very strong and positive, both by existing owners and prospects.” He said he expects the $25.5 million, 3,600-nm G300, one of the two GIV progeny, will prove to be a particular success in its targeted niche: the emerging market segment of large-cabin, not-so-long-range business jets that includes the Bombardier Challenger 604 and 800 and Dassault Falcon 2000 and 2000EX. The 4,100-nm G400, the more option-laden GIV offering, has a base price of $32.25 million. On December 3, Gulfstream marked the production end of the GIV series and the official start of production of the G300 and G400 with a ceremonial rollout of the 500th GIV.

The GV-SP, which received provisional FAA certification on December 11, will similarly evolve into two models (the G500 and G550) when the 200th GV rolls off the production line. Both derivatives will feature Gulfstream’s new PlaneView cockpit, but the $37.5 million G500 will have shorter range (5,800 nm) and less flexible option packages than the $44.75 million, 6,750-nm G550.

The company purposefully kept the plan to broaden its product line secret, even to the point of not telling its own salesmen in the field before the announcement at NBAA was made. As Boisture explained, “We decided that strategic competitive surprise was very important and felt the risk was worth it.”

Gulfstream’s product plan includes adding the G450, referred to thus far as the GIV-X (known to have Rolls-Royce Tay 611 engines and GV-like winglets) and the eventual replacement of the G100 with the G150, when this model goes into production in 2005.

Crews of 757 and Tu-154 that collided over German-Swiss border
It was an accident that stunned the general public for its tragic scope, but its implications caused pilots’ blood to run cold. On July 1 a westbound Russian Tu-154M airliner full of gifted students on their way to Spain for a holiday was cruising at 36,000 ft. It collided with a northbound Boeing 757-200  freighter over the German-Swiss border in the middle of the night. All 71 souls on board both aircraft were killed.

To those familiar with the air-traffic system–especially those who fly in Europe–the questions raised by the investigation of this remarkable collision were chilling. How could two crews possibly collide while cruising on virtually perpendicular tracks in clear air while under radar control? There was no suggestion of mechanical failure of any kind. Both aircraft had TCAS with the latest mandated software. Both crews were experienced and capable (early questions about the Russian captain’s grasp of English proved to be a red herring). And yet the two aircraft ran into each other in the expansive night sky.

The investigation turned up an extraordinary chain of coincidental lapses in the system. Swiss ATC provider Skyguide’s Zurich Center had temporarily shut down its short-term conflict-alert system for maintenance–standard procedure for the late hour when the usually heavy traffic in the sector slowed to a trickle. The sole backup controller was on break at the time of the accident, perhaps because the five targets on the center’s two active radar screens were considered light traffic. The on-duty controller was using a landline to hand off one of his five charges, which was on an instrument approach to nearby Friedrichshafen, Germany. Meanwhile, a German controller in the Karlsruhe Center had noticed the impending conflict on his radar and was desperately trying to call the Zurich Center, but the primary landline was out of service that night, and the sole backup line was busy as the handoff to Friedrichshafen was in progress.

But all those factors would likely have amounted to nothing if it hadn’t been for two conflicting commands to the Russian airline pilot. Both aircraft were cruising at 36,000 ft and converging fast, unnoticed by the Swiss controller. As the freighter pilots received a TCAS resolution advisory (RA) to descend, the Russian pilot’s TCAS commanded him to climb. But the Swiss controller, finally spotting the two targets merging, frantically instructed the Russian pilot to descend instead. After some hesitation, he chose to obey the controller and pushed the Tupolev’s nose over.

CVR tapes indicated that the crews saw each other’s aircraft at the last instant and tried to take evasive action, but it was too late. They collided at 35,400 ft.

TCAS scans for traffic twice every second, compared with the 12-sec sweep on a controller’s radar screen. Partly for this reason, ICAO-mandated procedures call for pilots to follow TCAS RAs over a controller’s instructions. But this accident and its aftermath proved that not all pilots in all operating environments were clear on the rule. Even after the accident, an informal poll by AIN revealed that, while most pilots reported that in a similar scenario they would have obeyed the TCAS, some respondents said they would have opted to obey the controller instead. If the mid-summer tragedy over southern Germany had any redeeming element, it was that it brought the correct procedure to the forefront.

André Dosé, CEO, Swiss International Air Lines
The story of André Dosé’s whirlwind odyssey from the comparative anonymity of his position as Crossair’s operations v-p to CEO of Switzerland’s international flag carrier might seem a bit mawkish, if it weren’t true. A one-time Crossair pilot known more for his technical expertise than his business acumen, Dosé assumed the mantle left by a pioneer of the modern European regional airline business, Maurice Suter, with the grace and self-assurance of a seasoned chief executive. As CEO of Crossair, he’d soon prove instrumental in rebuilding the foundation of his country’s air-transport industry. Now head of Swiss International Air Lines, Dosé carries the responsibility of steering Switzerland’s national flag carrier to profitability–quite a burden considering the legacy of losses bankrupt Swissair left in its wake.

Plans by Crossair managers to negotiate a rescue of the foundering Swissair began in June 2001. “Against all odds,” Dosé raised $1.6 billion and convinced shareholders to approve his plans to expand Crossair into an intercontinental operation by December. But not until early last year did Dosé’s hard work begin to bear fruit, as the airline adopted its “Swiss” brand name, signed 6,000 workers and secured Swissair’s operating certificate, airport slots and traffic rights. It also bought 52 new aircraft to create a fleet of 26 long-haul, 26 medium/short-haul and 78 regional aircraft. Dosé then signed an alliance with American Airlines, established global sales and cargo operations, crafted a series of new labor agreements and renegotiated aircraft leases, shaving 30- to 40 percent from Swissair’s lease costs.

Although the company drew its most significant cost saving from its negotiations with Aeropers, the union representing Swissair’s former pilots, it failed to satisfy the demands of the former Crossair pilots, who insisted on fleet-wide pay parity, regardless of aircraft type. Under the terms of the new contract, Swiss’ mainline pilots took a 35-percent pay cut, but the delegation representing Crossair’s pilots withdrew from the final round of negotiations. After the Swiss Pilots Association allowed Dosé’s September 15 signing deadline to lapse, the company withdrew a $10.6 million-a-year compensation improvement offer, forcing the regional pilots to continue working under the terms of the contract they signed in 2000.

Despite the dissent within its pilot ranks, Swiss’ European regional business started the year well, as Dosé’s attention to “very cautious volumes and yields” helped raise load factors higher than initial projections. Meanwhile, companywide results beat expectations through the first three fiscal quarters by roughly a third, culminating in a loss of SFr135 million ($92 million) in the third quarter on revenues of SFr1.38 billion ($938 million). By November, Swiss introduced a “comprehensive optimization program” designed to add SFr400 million ($272 million) in revenue by the end of this year, all in an effort to meet Dosé’s ambitious goal of accomplishing break-even margins this year.

The plan includes modifications to the airline’s route network from the start of the summer schedules, resulting in a fleet reduction of eight airplanes (one long-haul, one medium-haul, three charter and three 50-seat Saab 2000s). The actions will result in the loss of some 300 operations jobs, most of which the company plans to effect through natural attrition. At the same time, the company plans to create around 200 new positions in its technical services and IT divisions.

Piero Ferrari, chairman and president, Piaggio Aero Industries; Stephan Hanvey, president and CEO, Piaggio America
When Piaggio Aero Industries emerged from receivership in 1998, it was on the strength of new ownership, with Piero Ferrari as president and chairman of the board. The son of Enzo Ferrari, founder of the Ferrari auto dynasty, he seemed an appropriate choice for the job–he had served as vice president of Ferrari S.p.A for new product development, was president of the Italian Sports Car Commission and was responsible for engine design for High Performance Engineering.

Ferrari immediately put together a plan to rescue the struggling company. Within months Piaggio Aero increased the visibility of its star product: the sleek, fast Avanti twin-turboprop pusher. The company also expanded its sales force, launched a successful effort to improve support and service and began hiring in anticipation of growth. “There is something very good at the center of this company,” Ferrari said, describing a core group that refused to lose faith in the future of Piaggio Aero.

Two years after taking over at Piaggio Aero, Ferrari launched Piaggio America, a move designed to focus efforts on North America, the world’s largest market for business aircraft. The new subsidiary’s role was that of sales, support and service throughout North America for the Avanti, as well as interior completion. It was an obvious step, according to Ferrari, with about 30 of the 48 Avantis in service currently flying in North America. Along with the creation of Piaggio America, he hired Stephan Hanvey as its president and CEO. An experienced pilot, Hanvey had served in executive roles with Raytheon and McDonnell Douglas, and as a naval aviator, he was a graduate of the Naval Test Pilot School.

Hanvey is an unabashed admirer of the Avanti, with its radical three-surface (canard, wing, tailplane) design and pusher turboprops. “If the Avanti looks different, it’s because it really is different,” said Hanvey. “And, it’s better because it’s different.”
Between them, Ferrari and Hanvey have taken Piaggio Aero into the 21st century, revitalized and profitable. By 2000 the company had already turned the fiscal corner and was in the black. Profits for 2001 were $105,371, and Ferrari said the target for 2002 was $1.327 million.

Despite the U.S. economic downturn, the company was expecting to build 17 Avantis in 2002 and was optimistic that production for 2003 will exceed that number. And Ferrari and Hanvey are especially encouraged by the launch last October of a new fractional operator using a fleet made up exclusively of Avantis. Avantair, formerly Skyline Aviation Services, is based at Stewart International Airport in Newburgh, N.Y., and has two of the twin turboprops already in service, with all the shares sold. A spokesman said the company expected to receive two more Avantis in December and a third in January.

Ferrari and Hanvey are both looking forward to continued growth, possibly in terms of a new airplane. In the meantime, said Ferrari, Piaggio Aero is focusing on sales and support of the Avanti. “Even though the Avanti was designed 15 years ago, it remains the best-performing business turboprop in the world. And from this we build for the future.”

Stuart Oran, president, Avolar
The brief but heady trajectory of UAL Corp.’s foray into the business aviation fractional-ownership segment lasted almost exactly a calendar year. It seemed a perfect match–a network of fractionally owned business jets backed by the organizational and financial resources of the world’s second-largest airline.
At first glance the new enterprise looked to be a sensible strategy for the embattled airline, and UAL ex-vice president of international affairs Stuart Oran was just the person for the job. Oran had been responsible for a full third of United’s capacity and was looking for a new challenge.

The UAL board of directors authorized the creation of Avolar (originally named United BizJet Holdings) in May 2001, initially earmarking $250 million for the project despite protests by the beleaguered corporation’s union leadership and from Congress. It was money the airline could ill afford.    

After September 11, United deferred aircraft deliveries, retired older airplanes, cut capital spending and laid off employees. Compared with the third quarter of 2000, United’s payroll in the just-ended quarter was down by nearly 20,000 to 80,000 workers; its fleet shrank to 566 jets from 614; and its capacity, measured in available seat miles, was down nearly 12 percent. Average daily flights now stand at 1,900, down from 2,400 two years ago.

Despite its burgeoning fiscal ailments, UAL continued to stand by Avolar. As of February last year, Avolar had placed orders for a total of 306 aircraft from four manufacturers (Gulfstream, Dassault Falcon Jet, Raytheon and Bombardier) and had begun operating a Part 135 on-demand charter core fleet consisting of two Falcon 50EXs, a Hawker 800 and a Beechjet 400A. Avolar had further announced an agreement with Airbus to market and operate a fleet of as many as 15 Airbus Corporate Jetliners.

Despite this public appearance of success, Avolar was hemorrhaging money, so upper management decided to apply what could arguably be called a tourniquet for a head wound, turning off the cash supply on March 6 and announcing the immediate resignation of Stuart Oran. According to reports from within the ranks of ex-Avolar employees, Oran is still seeking an executive position in the Chicago area.

Avolar hung on until May 31, its last official day of operation. A handful of its 80 employees were absorbed back into the UAL structure; many of the rest opted to remain in aviation and are reportedly still looking for work.

The employee-owned airline last month filed for Chapter 11 bankruptcy, the largest in aviation history. It’s very existence now rests in the hands of the bankruptcy court.

All that remains of Avolar today are some brochures, a stack of trade press articles with photos of smiling executives shaking hands and a lawsuit against Gulfstream Aerospace for allegedly not returning order deposits. The idea of a major airline in essence competing with itself by peeling away its crème de la crème business travelers into a more exclusive travel class was audacious. But given contemporary business realities, it is an idea that will have to wait for a more favorable business climate before trying to bloom again.

Roy Norris, ex-president and CEO, Mooney Aerospace/AASI
When longtime aviation executive Roy Norris assumed the controls of foundering Advanced Aerodynamics and Structures Inc. (AASI) last January, it was at the invitation of investors of the Long Beach, Calif.-based firm, which had never produced a customer aircraft in more than a decade of existence.

AASI, which often struggled financially to continue development of its Jetcruzer 500 single-engine turboprop pusher, announced last January that it had elected a totally new top management team led by Norris to acquire other manufacturers of general aviation aircraft to supplement its trouble-plagued Jetcruzer project. AASI credited Norris with dramatic business turnarounds during his tenures at both Raytheon and Cessna.

A scant seven months later, Norris resigned his position at what by then had become Mooney Aerospace Group, saying that his work was done. According to Mooney’s filing with the Securities and Exchange Commission, the aviation veteran received a severance package totaling $225,000 in cash payments, including $60,000 in consulting fees, $65,000 in a severance bonus and $100,000 to be paid in five equal monthly payments, as well as 1.5 percent of the company’s Series A common stock and an additional bonus equal to a percentage of the amount invested in or loaned to Mooney Aerospace Group by an unidentified investor.

Peter Larson, former Mooney Aerospace president and CEO, (at press time he was replaced by Nelson Happy), claimed at a meeting of the Mooney Aircraft Pilots Association in September that Norris resigned for “serious personal reasons” and a number of things that “just happened to him” that he preferred not to take public.

One of the first things Norris did when he joined AASI was to go after Mooney Aircraft, which declared bankruptcy in July 2001 after running out of operating capital. In February AASI became the senior secured creditor of Mooney for $13.7 million, and began managing Mooney’s Kerrville, Texas plant. The new management resumed production of three Mooney models and slashed list prices by an average of 20 percent.

Norris also had been asked to reevaluate AASI’s Jetcruzer 500, which the company said in an early-March press release was three years away from certification. The company’s own investor fact sheet had been predicting mid-2002 deliveries as recently as August 2001.

But after evaluating the available resources and the potential Jetcruzer market, he convinced investors to shelve the program.

By last summer AASI had changed its name to Mooney Aerospace Group and its common stock trading symbol went from AASI to MASG. In addition, it announced that it closed $2 million in financing from a group of prominent Australian investors who specialize in aviation opportunities. Including that financing, Mooney said it raised a total of $3.9 million from accredited investors in the previous two months through the issuance of convertible notes.

The new Mooney Aerospace Group delivered its first completed airplane in July and received production certificates for its three current piston singles. Despite the influx of cash, however, investors continue to be nonplussed.

Vern Raburn, founder and CEO, Eclipse Aviation
For Vern Raburn, the year 2002 brought the endorphin high of a first flight for his company’s Eclipse 500 very light twinjet. On August 26, the diminutive airplane lifted off the runway in Albuquerque, N.M., defeating not only gravity but also the naysayers who insisted it would never fly. Test pilot Bill Bubb was among the relatively few people who knew that the Williams EJ22 engines were huffing and puffing their lungs just to put out less than half their 770-lb (each) sea-level rated thrust and get the airplane off the runway at the density altitude in effect at ABQ (5,380 ft msl) that hot summer day.

The year 2002 also brought to Vern Raburn the crashing low of accepting that those same Williams EJ22 engines, upon which his dream of an $837,500 personal jet were built, were incapable of meeting his needs. The airplane flew just once, and on the day before Thanksgiving, Eclipse announced it was severing its relationship with Williams International. (It should be noted that Williams defends its engine, and asserts it has met its contractual obligations with Eclipse.)

To say that Eclipse’s announcement was a shocker would be an understatement. Williams and Eclipse went together like Rodgers and Hammerstein, Pratt & Whitney, Rolls and Royce and Port and Stilton. They were made for each other. Raburn was inspired to build Eclipse– the airplane and the company–by seeing the Williams V-Jet (a futuristic Rutan design powered by a pair of tiny Williams turbofans) flying at Oshkosh 1997. Just as it always has throughout aviation history, the vision of a major leap forward–in this case personal jet transportation for the masses–hinged on the engine. Compared with the 770 lb of thrust it was supposed to produce, the touted 85-lb weight of this dog whistle of turbofans provided an unprecedented thrust-to-weight ratio. According to Raburn, the installed weight was higher.

By any measure, the bust-up with Williams is a massive setback for Eclipse, but Raburn is quick to swing the conversation away from his bitterness with the engine fiasco and back onto the bright future ahead for Eclipse once replacement engines are chosen. With a promoter’s zeal, Raburn said the re-engined airplane will be better than the original: “Clearly there’s a cost to pay, but across the board the new airplane is going to be significantly better. More important, it’s going to be a radically more reliable aircraft.”

Raburn faces a formidable task. Even before this setback he needed to raise more capital to finish, and the project has stumbled spectacularly enough to dull the cutting edge of the confidence with which Raburn has so blithely dismissed the doubters thus far. Rehoning that edge and convincing customers and investors that he can still pull it off promises to be the toughest task Raburn faces.

Kenn Ricci, chairman and CEO, Flight Options
The fractional aircraft business hit full stride during the go-go nineties but lost momentum after the dot-com plunge in 2000. So it was not surprising that many smaller frax operators began to quietly close their doors and the larger ones considered consolidation.

What did surprise was the merger of the fourth-largest provider, Flight Options of Cleveland, Ohio (the only one of the Big Four operating pre-owned business jets), with the third largest, Wichita-based Raytheon Travel Air (RTA), an OEM-owned fractional operator. The combined company (with some 200 airplanes and 2,000 shareowners) continued as Flight Options LLC under the leadership of Flight Options’ founder and CEO, entrepreneur Kenn Ricci, and took over the number-two position behind NetJets, relegating Bombardier Flexjet to number three.

Ricci and his investors own 50.1 percent of the company while Raytheon Co. holds 49.9 percent, although at the time of the merger Raytheon said it intended to convert some or all of its stake in the combined company to cash. But in its third-quarter 10-Q report to the Securities and Exchange Commission (filed November 6), Raytheon said the new entity “has been pursuing additional equity financing, but has not yet secured the funds…If Flight Options is not successful in this regard, the Company [Raytheon] may offer to exchange the Flight Options debt it currently holds for additional equity in the joint venture, whereby the Company could be responsible for its operations, own a majority of Flight Options, and consolidate Flight Options in its financial statements.”

Besides his search for additional financing, Ricci is also contending with other aspects of the March 21 merger. On January 16 last year, the RTA pilots voted down representation by the International Brotherhood of Teamsters, the same union that represents the pilots at NetJets. Following the merger, however, several former RTA pilots found themselves dismissed from Flight Options. With the help of IBT lawyers, six pilots who had been active in the union-organizing effort at RTA filed a lawsuit on September 6, claiming wrongful discharge. Another RTA pilot filed a separate lawsuit on July 21, also for wrongful discharge, but for different reasons.

After reviewing the lawsuits, Ricci told AIN, “Obviously, those pilots believe they were wrongfully terminated and we don’t, but we have to justify what we do. If we act irrationally as a company, then other people won’t work for us. So I think we have a strong case. I think there were about 180 votes for the union at Travel Air. So, clearly, this wasn’t any attempt to go after the union.”

Meanwhile, IBT’s organizing effort at Flight Options, which began shortly after the merger, has yet to generate enough representation cards to allow IBT to apply for permission to conduct a vote for or against union representation, according to Don Treichler of the union’s airline division.

In August, the 900 Flight Options pilots, in a mandatory vote, selected a seniority plan that combined the seniority lists of the Flight Options pilots and the former RTA pilots. The new list became effective on October 1.

David Siegel, CEO, US Airways
David Siegel’s quest to return to the airline industry after two years of relative obscurity in the car-rental business ended this past March, when US Airways recruited the former Continental Express president to guide the nation’s seventh-largest carrier out of its financial doldrums. Nine months later, the lead architect of Continental Express’ regional jet fleet faces challenges even he did not anticipate, as an economic and cultural upheaval exacerbated by the events of 9/11 promises to deal him his sternest professional test to date.

One of the regional industry’s most vocal champions of regional jets when many executives harbored doubts about the concept’s cost viability, Siegel set a clear agenda for US Airways as soon as he took charge. The airline’s future would depend on the complete development of a regional jet network, he insisted, both within US Airways’ existing structure and through the addition of new divisions and partnerships dedicated to the advancement of that cause.

Barely a month after he took over the CEO position from Stephen Wolf, Siegel signed off on a new scope clause that would allow the airline to double the number of regional jets within its system from 70 to 140. As promised, Siegel didn’t stop there. After bolstering US Airways’ presence in the Caribbean with a deal to add the US Airways code to 14 destinations served by three separate regional carriers, the new CEO led negotiations on one of the most radical scope-clause amendments ever signed. The agreement gave US Airways the authority to fly up to 465 regional jets of various sizes, a concession that laid the most fundamental building blocks for Siegel’s recovery plans. 

The contract featured the airline’s innovative and controversial “jets for jobs” program, under which furloughed US Airways pilots won the right to fly all regional jets placed with the airline’s new subsidiary, the still inactive MidAtlantic Airways, and at least half of all jets placed at the rest of the “participating” Express carriers. As expected, the provision drew cries of protest from regional pilots, who feared displacement from their own jobs. Recognizing the weakness of their position, however, the pilots of the three wholly owned subsidiaries eventually signed new contracts, allowing “jets for jobs” to proceed as planned. 

Of course, executing the plans would prove far more difficult than simply committing them to paper, particularly while the company struggles to emerge from Chapter 11 bankruptcy. Although Siegel managed to gain conditional approval for a $900 million loan guarantee from the Air Transportation Stabilization Board, the bankruptcy delayed the opening of MidAtlantic Airways until at least the middle of the year and undoubtedly weakened the airline’s ability to attract financing for regional jets, particularly within the wholly owned divisions.

Now Siegel faces the prospect of asking for another $400 million in cost concessions on top of the $850 million in pay cuts already extracted from US Airways employees. Siegel blamed the threat of war with Iraq, higher fuel prices and a softening economy for the airline’s $335 million in losses during last year’s third quarter. Given those conditions, he said, the company must shave even more costs to qualify for the government loan guarantee and emerge from Chapter 11 by the spring. 

Newsmaker of the Year

James Loy: Security Agency’s Intrusion Pervades Bizav
Throughout the history of business aviation, operators, owners and suppliers thought they had seen it all–from the exasperation of fuel shortages and skyrocketing fuel costs to the highs and lows of the economy. Business aviation has witnessed the rise and fall of startup OEMs, the ebb and flow of aircraft inventories and prices and seen how fractionals have altered the face of the industry.

Then came September 11.

In the flash of crashing airliners and collapsing buildings, all the events, good and bad, that business aviation has had to fly through suddenly paled in the face of the horrific events of September 11 and their aftermath. And during the 15 months since, no other aftermath has been more intrusive on the day-to-day business of business flying than the regulations, policies and proposals emanating from the Transportation Security Administration (TSA). 

The TSA, whose broad mandate is to regulate civil aviation security, was established by an act of Congress as a unit of the DOT fewer than 60 days after 9/11. (The TSA will become part of the new Homeland Security Department.) Not only is this record time for a top government agency to be created, the TSA was given regulatory footing equal to that of the FAA, also part of the DOT. It’s this equality of position within the DOT that has, in part, led to the TSA bumping heads with the FAA and issuing many confusing and contradictory rules.

Its effects are felt on the ground, through more stringent security checks of personnel and baggage, and in the air, through myriad temporary flight restrictions (TFR), once the sole responsibility of the FAA. TFR locations and descriptions are often so confusing that even FSS briefers are not clear or up to date on this information.

Last year the TSA turned to business aviation specifically with the so-called 12-5 and 95K rules, well intended but ill-conceived attempts to regulate air-taxi security. Except for the ever-changing TFRs, Part 91 operations haven’t yet been targeted by the TSA specifically for any permanent security requirements. 

To its credit, the TSA has been working with several trade groups to better understand, and therefore more realistically regulate, security of the general aviation industry. There has been progress here. For example, last year the TSA delegated the National Air Transportation Association to train and certify individuals to collect and process fingerprints required for airport tenant employee background checks.  Also, the TSA and AOPA recently completed setting up a nationwide airport-watch system, the centerpiece of which is a toll-free hotline for pilots to report security alerts to the TSA.

The General Aviation Coalition in the fall met with the TSA’s boss, James Loy, in the first of what is expected to be a series of biannual meetings. During the coalition’s meeting with Loy, the GA community focused its discussion on issues such as TFRs, airport-watch programs, international access, charter flights and flight training.

What else does the TSA have up its sleeves for business aviation in the coming year? Sorry, but it’s not saying. That’s a security question, and the answer, for the time being, is confidential.


Sino Swearingen
Jack Braly to Carl Chen

Less than a week after the NBAA Convention closed last year, Dr. Carl Chen, former chairman, president and CEO of AASI, suddenly replaced Jack Braly as president and CEO of San Antonio-based Sino Swearingen, developer of the long-delayed SJ30-2 business jet.

While Sino Swearingen officials praised Braly for his accomplishments as CEO, they would not give any reasons for the abrupt change in the company’s top leadership. But, SJ30-2 development has suffered from financial ailments and one delay after another since its inception more than a decade ago. A one-year slip in the expected certification date–from the end of last year to the end of this year–was revealed last May.

Under Chen’s leadership, AASI projects also suffered delays, financial problems and, eventually, cancellations. The company received certification in 1994 of the unpressurized Jetcruzer 450 turboprop single, but that airplane never went into production. Then early last year Chen was replaced at AASI by business aviation veteran Roy Norris (see page 22), who pulled the plug on the drawn-out development of the Jetcruzer 500 and merged AASI with near-bankrupt Mooney Aircraft to form Mooney Aerospace Group. (Norris resigned from Mooney in August.)

An aerospace engineer, Chen received his Ph.D. from California Institute of Technology. He had business management training at the Harvard Business Graduate School. In addition, Chen holds a master’s degree in control engineering from the University of West Virginia. Less than a month after Chen became president and CEO of Sino Swearingen, he hired Gene Comfort, another alumnus from AASI, to be v-p of sales and marketing.

Sino Swearingen claims it has orders for more than 150 aircraft, down from the highest it ever claimed–175 in June 2001.

Lawrence Bossidy to David Cote

The choice of former TRW head David Cote to succeed Lawrence Bossidy as chairman and CEO of Honeywell last February saw the reins of power at the Morristown, N.J. company handed from one former General Electric executive to another.

Cote and Bossidy are both protégés of recently retired GE CEO Jack Welch, a man known best for his intensity and ingenuity on the business playing field.
Bossidy, 67, came out of retirement to take the helm again at Honeywell in 2001 after GE’s bid to buy the company crumbled under European scrutiny. It would have been the biggest industrial takeover in corporate history, but instead left Honeywell’s direction in limbo.

Hamstrung by a weak economy that was choking spending by Honeywell’s biggest customers, Cote was nevertheless left in good stead by his predecessor. Bossidy in his final days as CEO established an aggressive cost-cutting strategy that streamlined the company by shedding non-core businesses outside of aerospace. Thanks to the restructuring, Cote has been allowed to concentrate on boosting productivity and sales at Honeywell’s various units.

Bossidy’s path back to the helm at Honeywell after a brief retirement follows a circuitous route that almost requires a flowchart. After a successful career at GE as a top lieutenant to Welch, he became chairman and CEO of AlliedSignal, which in late 1999 bought Honeywell, taking the latter’s name. Following that merger, Honeywell’s current chairman and CEO, Michael Bonsignore, became head of the new company. A year-and-a-half later, when the GE-Honeywell merger unraveled and the aerospace market entered its tailspin, Honeywell’s board fired Bonsignore and brought back Bossidy.  

The irony of this transition rests in a recent European Court finding calling into question decisions by the European Commission to block several high-profile mergers. Among the half-dozen deals under challenge: GE’s proposed merger with Honeywell.

Jane Garvey to Marion Blakey

While his comments probably didn’t receive high marks for political correctness, one senator may have summed it up best when he told Marion Blakey at her confirmation hearing to become FAA Administrator that she would “follow big shoes, even if they were high heels.”

He was referring, of course, to Blakey’s predecessor, Jane Garvey, who as FAA Administrator made history in two ways–as the first woman to head the agency and the first agency boss to serve a congressionally mandated five-year term.

Although Garvey’s appointment by President Clinton in 1997 was met with more than a little skepticism by members of the aviation community, largely because her aviation experience consisted solely of a two-year stint as aviation director for the Massachusetts Port Authority, her personality and management style eventually won over nearly all of her early critics.

That included some powerful members of Congress, who, while giving Garvey plaudits, warned that Blakey may face the same doubts over her lack of aviation experience. But Blakey already has a reputation as a good manager, and in one of her first speeches as FAA Administrator, she promised to continue the “real spirit of cooperation” that Garvey had built among the different members of the aviation community.

Garvey never missed an annual trip to EAA AirVenture (Oshkosh) during her five years at the helm of the FAA, in addition to one she made just days before taking office in 1997. Blakey, during her brief tenure as chairman of the NTSB, has already forged working relationships with some general aviation groups, including NBAA and AOPA.

And in her first official visit outside Washington after she took office in mid-September, Blakey traveled to Wichita, where she toured Raytheon Aircraft and Cessna Aircraft and spoke with other General Aviation Manufacturers Association member companies.

Gary Hay to Russ Meyer

Gary Hay’s storybook ascent from the shop floor of Cessna in 1966 to the office of CEO in 2000 came to an abrupt halt on June 30 when he retired from the post that he had been working toward throughout his career with the Wichita manufacturer. More surprising still was that Russ Meyer–who had groomed Hay for the top spot and relinquished to Hay the post of CEO in 2000– took his place. Meyer announced that he would serve as interim CEO of Cessna in addition to fulfilling his role as president of the then newly formed “aircraft sector” of Cessna parent Textron–the role for which Meyer had relinquished the CEO position
at Cessna in 2000.

The corporate explanations did little to lift the veil. Cessna said only that there were “some differences in philosophy between him and other senior [Textron] managers” over the transformation going on at all Textron divisions, and that Hay’s resignation had “absolutely nothing” to do with the downturn in orders and a diminishing backlog. (Shipments of 62 Citations in the first quarter of 2002 were down by just two airplanes compared with the same period in 2001, but piston deliveries were down by a larger margin.)

In Textron’s statement on Hay’s departure, chairman Lewis Campbell noted: “Over the past 18 months we have undertaken extraordinary changes to Textron’s business model…So far these changes have had a very positive impact at each and every Textron operation. However, we are at an important juncture. The entire management team must be committed to, and engaged in, every aspect of transformation. In this context, Gary has decided, with my support, to retire from the company.”

Russ Meyer to Steve Loranger

The same reorganization at Textron that placed Gary Hay among this year’s AIN Newsmakers also puts Steve Loranger on the list. The common denominator in both entries is Cessna chairman Russ Meyer. The item above on Hay provides some of the background to Loranger’s appointment, in that Meyer has returned to the chairmanship of Cessna from his role as president of Textron’s former aircraft sector. Under that arrangement, Meyer had been appointed the “aviation supremo” at Textron, responsible for guiding both Cessna and Bell Helicopter to better times. Of the two, Bell Helicopter had by far the more arduous journey, a disparity that raised some eyebrows at the time the reorganization was announced. Meyer’s role was also expected to provide Textron chairman Lewis Campbell with a clearer “line of sight” into the company’s builders of flying machines. With Hay’s departure, Meyer, now 70, returned to his role as chairman of Cessna, and Loranger in late October moved into the position of Textron executive v-p and COO, overseeing Textron’s manufacturing businesses, including Bell and Cessna.

With Loranger’s appointment, Textron has reverted to its former “COO” structure from the “sector” structure (of which Meyer had been a part) devised just over a year ago to more closely align such ostensibly similar properties as Cessna and Bell Helicopter.

Loranger, 50, spent 21 years at Honeywell and most recently served as president and CEO of Honeywell Engines. He was a pilot in the U.S. Navy from 1975 to 1981 and is an active pilot today, with more than 3,700 hr of flight time.

Final Flights

FAA Administrator Marion Blakey perhaps best expressed the magnitude of the loss the airline industry suffered when 92-year-old Dick Henson succumbed to Alzheimer’s disease on June 12.

“We could all learn a lot from Dick Henson,” said Blakey, referring to Henson’s contributions to the regional airline industry and the community at large. “That’s the kind of legacy we should all strive to leave.” 

Universally acknowledged as a pioneer of the commuter airline business, in 1931 Henson planted the seeds for what would become Piedmont Airlines, when he opened an FBO and charter service in Hagerstown, Md. Thirty-six years later, Henson Aviation and Allegheny Airways forged the industry’s first code-share affiliation, building a model for countless partnerships to follow and laying the foundation for today’s regional airline business.

In 1983 Henson sold the business to Piedmont Aviation, but continued to run Henson, The Piedmont Regional Airline as CEO. In 1987, US Air bought the company, and Henson soon relinquished his day-to-day duties in favor of more profound achievement as a philanthropist, aviation ambassador and community activist.

Today, Henson’s legacy of goodwill survives most notably in the Richard A. Henson Foundation, the primary conduit for Henson’s endowments to Salisbury-area schools, cultural institutions, hospitals, housing projects and community outreach centers.

At Randy Kennedy’s funeral mass, a squadron mate from U.S. Air Force days began his eulogy by shaking his head and saying sadly, “It’s always the wrong guy.” Kennedy, 63, died July 7 at his Saddle River, N.J. home. The cause of death was a stroke, likely brought on by advanced Alzheimer’s disease.

After his release from active service in 1967 (he flew F-100 Super Sabres at Lakenheath, England), Kennedy joined the business-aviation community almost by accident. As a prospective Pan Am Boeing 707 pilot, he curiously answered a call for pilots to help start a new business-aviation venture with that airline. What began as an alliance between Pan Am and Dassault is now known as Dassault Falcon Jet.

Kennedy served as chief demonstration pilot, as well as in the sales department for Dassault Falcon Jet. Ill health forced his retirement in 1998. Kennedy built a reputation as a pilot’s pilot, but also as a prince of a human being who brought integrity, humility and a good measure of fun to business aviation.

He once told AIN, “A monkey can fly these airplanes safely. The hard part is customer service.” Kennedy’s two sons have followed in his footsteps–Christian is a sales and demonstration pilot for Gulfstream; Grant is a sales engineer for Dassault Falcon Jet.

Roy LoPresti, long known for extracting the most knots per horsepower out of general aviation airplanes of his own design (Grumman American Cougar and Mooney 301) or by tweaking others (the Mooney into the 201 and 231 and the Temco Swift into the SwiftFire/SwiftFury), died August 7 in Florida at the age of 73. LoPresti had fallen off a ladder at his Vero Beach home on July 5 and sustained a head injury that put him in intensive care for 28 days. He died while progressing well in rehabilitation, from complications with equipment designed to trap blood clots, according to his son, Curt.

After graduating from NYU in 1950, Roy LoPresti’s 16 years with Grumman included duty as a designer and consulting pilot on the Apollo Lunar Module, and it was while he was at Grumman that LoPresti designed the Cougar and Tiger. He joined Mooney in the 1970s, and in the 1980s he served at Beech as v-p and chief engineer. His redesign of the Swift was a project for late-1980s Piper owner Stuart Millar. Most recently LoPresti was president of LoPresti Speed Merchants, the airplane speed-mod business he ran with seven family members, including his wife, Peg.

Desmond Norman, the engineering half of the duo that conceived the Britten-Norman Islander and Trislander, died on November 13 at the age of 73 following a heart attack. (John Britten, his business partner since the 1940s, had died in 1979.) Although best known for the Islander 10-seat piston twin (260 or 300 hp each side) and Trislander (which added a third 260-hp piston engine to the fin, DC-10-style, and eight more seats), Desmond Norman later turned his attention to the military trainer market (with the Firecracker) and crop spraying (with the Fieldmaster, a large single-PT6-powered agplane). But none of his projects achieved the success of the Islander and its three-engine stablemate, which sold a combined 1,250 copies, two-thirds of which are still earning their keep. Noisy but solid with its boxy fuselage, high slab wings and long-legged fixed landing gear, the Islander was not the most elegant flying machine, but it brought air service to unlikely environs by virtue of its short runway requirements and reliability. Norman journeyed to the American Midwest a few summers ago, a seasoned airplane engineer reveling in the variety of flying machinery on display at the Oshkosh show.