City lands airline HQ; deal worth 104 jobs By Urvaksh Karkaria The (Fort Wayne, Indiana) Journal Gazette A regional airline, less than a year out of bankruptcy, will relocate its corporate headquarters to Fort Wayne, bringing with it more than 60 jobs and retaining about 40 locally. Connecticut-based Shuttle America, a regional carrier for US Airways, will move its headquarters from Windsor Locks, Conn., to Fort Wayne International Airport. Along with about 100 jobs Shuttle America plans to have in Fort Wayne by year's end, the carrier could add 70 jobs in the next two years. The airline was lured to Fort Wayne with more than $750,000 in incentives. The airline will invest about $100,000 in building improvements. "Fort Wayne's package was the primary reason that we made the decision to come here," Scott Durgin, president and chief executive officer, said in an interview Monday morning. "It was absolutely huge." Fort Wayne competed with New Haven, Conn., and Bedford, Mass., for the business. Fort Wayne's central location to Shuttle America's markets was also attractive, Durgin said. Two thirds of the airline's flights go to Pittsburgh. Shuttle America will operate four daily US Airways Express flights from Fort Wayne to Pittsburgh on turboprop aircraft starting July 7. Chautauqua Airlines is currently operating the service and a maintenance hangar at the airport. The Indianapolis-based airline will discontinue operating the hangar and local air service starting July 7. Chautauqua has decided to exit the turboprop business because it sees growth opportunities in the regional jet market. Shuttle America, which has a fleet of 16 aircraft, will offer a daily round-trip flight to Indianapolis starting July 8. Other markets that Shuttle America serves include Toledo, Cleveland, Lexington, Ky., and Nashville, Tenn. Shuttle America plans to add 64 jobs by the end of the year along with retaining 40 local jobs that would have been lost after Chautauqua leaves. The average annual salary will be more than $35,000. The airline has a four-year lease on the estimated 60,000-square-foot building and will pay $120,000 annually in building rent. Shuttle America, which began operations in 1998, filed for Chapter 11 in April last year and emerged about eight months later. In October, Shuttle America began operating as a US Airways Express carrier. Under the Chapter 11 reorganization plan, the airline was sold for $1.4 million to Shuttle Acquisition Corp., a unit of Greenwich, Conn.-based Wexford Capital LLC. Wexford also owns Chautauqua. Shuttle America ran into financial trouble because the aircrafts it operated were large and expensive, said Robert Mann, an airlines analyst from Port Washington, N.Y. "They were not putting enough revenues on those aircraft," he said. "They were not carrying enough passengers at high enough prices." The airline's mission is to be a low-cost turboprop operator, Durgin said. "That's the only way you are going to survive in a turboprop world as an operator," he said. The airline's operating costs are about 10 to 20 percent lower than other Saab turboprop operators, Durgin said. But even as the airline industry moves toward larger, faster and roomier regional jets, there is a market for the less expensive turboprops, Durgin said. "There's still going to be communities out there that won't be able to support regional jets," he said. About 68 percent of all daily flights out of Fort Wayne are on regional jets. Shuttle America will bring additional lease revenues to the Fort Wayne-Allen County Airport Authority and increase commercial activity, said Skip Miller, the airport authority's executive director. "We have a good solid corporate citizen moving to our community," he said. Having Shuttle America's maintenance hangar will give the airport a chance at attracting more business, said Tim Haffner, an airport authority board member. "It puts you on the map," Haffner said. "It's easier to represent with credibility that you have the capabilities of becoming a maintenance facility if you have it currently." But some analysts are concerned about Shuttle America's alliance with US Airways. Arlington, Va.-based US Airways is bleeding money. It lost $2 billion last year and reported a $269 million loss during this year's first quarter. The company's stock has nose-dived more than 40 percent since the beginning of the year, closing Monday at $3.65 on the New York Stock Exchange. Initially, getting a deal from a major carrier like US Airways was a grand coup for Shuttle America, analyst Mann said. "But it may turn out that this isn't the most viable of network deals because of US Airways' financial troubles," Mann said. While Durgin said Shuttle America is also looking to do business with other major carriers, he declined to name them. Mann remains guarded on Shuttle America's financial future. The airline industry is heavily stressed because of the overall economy and because businesses are trimming their travel budgets, Mann said. Despite the financial battering being meted out to the industry, Durgin is optimistic. "The fares are low, passenger ridership is down," he said. "But we remain bullish in the future." Local economic development officials say the incentives package is structured to protect the community even if Shuttle America were to leave prematurely. The incentives are phased over the period of Shuttle America's lease, Haffner said. In a worst-case scenario, the airport authority would have a newly renovated building that would be more easily marketable, said Karen Goldner, the city's economic development director. "We will also have improved water service to the airport, half of which the state will have paid for," Goldner said. ------------------------------------------------------------------------ © 2001 journalgazette and wire service sources. All Rights Reserved. http://www.fortwayne.com _________________________________________________________________ MSN Photos is the easiest way to share and print your photos: http://photos.msn.com/support/worldwide.aspx