Travel Air, Flight Options on merger final approach

 - March 25, 2008, 6:47 AM

The combination of fractional providers Flight Options and Raytheon Travel Air (RTA) into Cleveland-based Flight Options LLC is expected by the end of this month, according to Flight Options CEO and founder Kenn Ricci. Government antitrust approval was granted in the middle of last month, clearing the merger’s last big hurdle.

Under the cashless deal first announced in late December, Flight Options LLC will assume between $50- and $70 million of unsold aircraft inventory from RTA, for which the Cleveland-based company has signed a promissory note.

As part of the agreement, Flight Options over the next couple of years will take delivery of a mix of 115 new Premier Is, Beechjets and Hawker 800XPs from Raytheon Aircraft. Flight Options will also order up to 50 Raytheon Hawker Horizons, and Ricci said the final number will be determined by the potential delivery dates.

Crossing Over
Coming to Flight Options from RTA will be v-p of operations Tony Marlow, v-p of sales Drew McEwen, more than 500 pilots and flight attendants and 50 operations control personnel. Notably absent from this list is RTA president Gary Hart, who will stay with Raytheon Aircraft as president of the aircraft charter and management division.
Starting April 1, Ricci said, all the “control teams,” Flight Options’ lingo for operations staff, will be working out of Cleveland, and the RTA operations center in Wichita will be shut down. Flight Options at press time was putting the final touches on its new operations center at Cleveland Cuyahoga Airport, and Ricci expected the facility to be fully operational before the end of this month.

The CEO said there will be separate control teams for each of the new and pre-owned aircraft models. For example, the pre-owned Beechjet fleet coming from Flight Options will not share the same control team as that of the new Beechjet fleet arriving from RTA. Ricci said the only fleets that are likely to be merged, from an operational team standpoint, are RTA’s and Flight Options’ respective pre-owned Challenger fleets. He also said the new and pre-owned products will be treated separately within the new organization.

According to Ricci, RTA and Flight Options combined sold shares in 19 whole aircraft from the time the merger was announced in December until the middle of last month. He had predicted that share sales would remain flat in this economy, but they have greatly exceeded his expectations. Also on the sales front, Ricci indicated that Flight Options will release a new pricing strategy early this month.

One of the thorniest issues of this merger is the integration of the two pilot groups. With a combined pilot workforce of more than 900, this amounts to Ricci and his management team walking a tightrope of sorts. One misstep could cost Ricci the positive employee relations he so enjoys and touts publicly.

Taming of the Pilots
Pilot seniority is paramount to the pilot group as a whole, and the Flight Options CEO is letting the pilots themselves solve this prickly problem. He said about six teams of RTA/Flight Options pilots are working on ideas on this front, with a deadline of April 1.
Ricci said those seniority-integrations solutions will be put to a vote by the entire pilot group, and the winning idea will be implemented June 1. This way, he said, “the seniority integration will be fair to both the RTA and Flight Options pilot groups.”

To put RTA pilots on par with their counterparts at Flight Options, the former pilot group has been assigned to specific N-number aircraft, an arrangement that will take effect next month. This practice has been a fixture at Flight Options due to the nonstandard cockpits in its pre-owned aircraft, which prohibits pilot from “floating” among them. Although RTA aircraft are nearly identically equipped, Ricci decided to take this route to standardize operations throughout the new company.

But assigning pilots to specific N-numbers has led to a realignment of some RTA pilots. Some have been bumped from PIC to SIC positions in their current aircraft, or from a PIC position in a larger aircraft to PIC in a smaller aircraft. While this has rubbed some RTA pilots the wrong way, Ricci noted that these pilots will maintain their current salary despite their being bumped to lesser positions.

Not all is gloom and doom with respect to the pilots. RTA pilots, who are currently on a six-day on, four-day off work schedule, will be on the Flight Options eight-day on, seven-day off schedule starting next month. This change will result in the former RTA pilots working 24 fewer days per year, from 219 days to 195.