From: http://www.fortwayne.com/mld/journalgazette/6792643.htm Posted on Wed, Sep. 17, 2003 City airline fails to win concession Shuttle America could be grounded By Urvaksh Karkaria The Journal Gazette A Fort Wayne-based airline with more than 150 local employees could soon be grounded after its pilots overwhelmingly rejected a concession package, the airline's chief executive said in a memo to employees Tuesday. Shuttle America, a US Airways regional carrier, relocated its headquarters from Windsor Locks, Conn. to Fort Wayne International Airport last fall. The airline operates five daily round-trip flights between Fort Wayne and Pittsburgh, with reduced service on weekends. Shuttle America is the only airline offering air service from Fort Wayne to Pittsburgh. Shuttle America was lured to Fort Wayne with about $750,000 in incentives from the Fort Wayne-Allen County Airport Authority and state and local governments. In the absence of new developments that would permit the company to operate, Shuttle America plans to halt operations between Oct. 27 and Dec. 31, President and Chief Executive Officer Scott Durgin said in the memo, a copy of which was e-mailed to The Journal Gazette. Durgin could not be reached for comment Tuesday. Shuttle America, which began operations in 1998, filed for Chapter 11 protection in April 2001 and emerged about eight months later. Under the reorganization plan, the airline was sold for $1.4 million to Shuttle Acquisition Corp., a unit of Greenwich, Conn.-based Wexford Capital LLC. "While we had reached agreements with Saab, US Airways, Wexford and several other creditors on a reduction of our obligations and a restructuring of our debts," the letter said, "those agreements were ... conditioned upon a positive vote on the pilot wage concessions. "I am sorry to report that this means the restructuring plan we have been focused on for the last four months has failed," the memo continued. The airline operates a fleet of 17 Saab 340 aircraft out of US Airways' Pittsburgh hub and employs more than 350 aviation professionals. "I certainly hate to admit defeat," Durgin said, "but our creditors ... certainly needed to know that the other stakeholders involved in the restructuring were doing their 'fair share' to participate in the carrier's recovery." For the short term, the airline is expected to operate at least through October, the memo said. Larry Thompson with the Greater Fort Wayne Chamber of Commerce Air Service Development said it is too early to say what effect a potential shutdown might have for local passengers. "US Airways has other regional airlines which would likely be called upon to fly Shuttle America routes if that becomes necessary," Thompson said. While acknowledging the situation is critical, Rob Young, president of the Fort Wayne-Allen County Economic Development Alliance, said he is not ready to close the book on the company. "I don't believe this is the last chapter of the story for Shuttle America in Fort Wayne," he said. "We have until the end of the month to see how things unfold here." Young also said the airline's restructuring is an internal issue between the company, its lenders and others, which means the city could not get involved. Nearly $500,000 of the estimated $750,000 in investments was in upgrades to Shuttle America's building and infrastructure on the west side of the airport, the Alliance's Young said. Those are reusable resources, and the investment has made the area more marketable, he said. The dire situation notwithstanding, Shuttle America's Durgin said in the memo he is "actively involved in two different marketing campaigns to preserve this airline's future." "This is a long-shot," he continued, "but I am not someone who gives up easily." -------------------------------------------------------------------------------- © 2003 Journal Gazette and wire service sources. All Rights Reserved. http://www.fortwayne.com _________________________________________________________________ Get 10MB of e-mail storage! Sign up for Hotmail Extra Storage. http://join.msn.com/?PAGE=features/es