FortWayne.com
Tue, Jun. 25, 2002

Shuttle America will bring jobs
The carrier will employ at least 104 by year's end, and up to 174 within three years.

By Doug LeDuc
of The News-Sentinel

An aircraft maintenance base scheduled to close at Fort Wayne International Airport in August will remain open, and the facility housing it will become the headquarters for a growing young regional carrier.

Shuttle America Corp. will locate its headquarters here by Sept. 1. The regional carrier, which provides US Air connecting flights, will take over Chautauqua Airlines service between Fort Wayne and Pittsburgh on July 7 and begin service the same day between Fort Wayne and Indianapolis.

Instead of losing 50 jobs at the facility at 11102 W. Perimeter Road, the airport will see Shuttle America employ at least 104 there by the end of the year, and up to 174 within three years. The company will have a four-year lease on the building.

Shuttle America had considered New Haven, Conn., and Bedford, Mass., for its headquarters. But "Fort Wayne was the most aggressive in recognizing the value of the jobs . . . to the community," said Scott Durgin, chief executive officer.

The city, county and state plan to spend $751,000 on the incentive package that persuaded the company to move its headquarters here. The package
includes:

- An investment of $250,000 into the Perimeter Road facility by the Fort Wayne-Allen County Airport Authority.

- Up to $236,000 split between Allen County and Indiana Commerce Department for improvements, which include running a water line to the area.

- Lease assistance of $180,000 from Fort Wayne.

- An $85,000 Indiana Skills Enhancement Fund grant from the Indiana Commerce Department for employee training.

The company will spend $100,000 on the facility's $350,000 upgrade. The project will include construction of executive offices, training rooms and a dispatch center. Construction is scheduled to start during the third week of July and be completed by September.

Shuttle America will pay the airport authority $120,000 a year for the facility, and the city will cover $60,000 of that annually for the first three years if the company makes good on its employment.

Although the company is only leasing the facility for four years, Durgin said it would "like to be here a long time."

Another chance

The company was given a better chance of operating for several more years when it was bought out of Chapter 11 bankruptcy last winter by Wexford Capital, which put in place a much better business plan, he said.

Shuttle America had $23 million in debt, which Wexford agreed to settle as part of a court-approved plan to buy the bankrupt company for $1.4 million.

Wexford is an investment company, which manages more than $700 million in private equity, Durgin said. It "uses that money to invest in companies such as Shuttle America that are either undercapitalized or need some restructuring."

Wexford also owns Indianapolis-based Chautauqua Airlines.

Shuttle America filed for bankruptcy in April 2001. The company ran into trouble because it was "out there trying to build a brand (and) . . . wasn't affiliated with any (major) carrier," Durgin said. "That takes a lot of money."

"Being affiliated with US Air, we now have an established brand. That brand markets itself in the computerized reservation system. It allows the company to focus on operating safely and efficiently," he said.

Before the bankruptcy, the company never operated more than half a dozen planes along the East Coast, he said.

Under Wexford ownership it began adding aircraft each month, starting in February, and now operates 16. It plans to have at least 18 SAAB 340A turboprop aircraft in operation by the end of the year.

To apply for a job:
Submit a resume at the offices of Indiana Department of Workforce Development and JobWorks at 201 E. Rudisill Blvd. or e-mail resume to msmith@jobworksinc.org.

© 2001 fortwayne and wire service sources. All Rights Reserved. ==========
**NOTICE: In accordance with 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.** ==========

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Fort Wayne Journal Gazette
Tues., Jun. 25, 2002

City lands airline HQ; deal worth 104 jobs

By Urvaksh Karkaria
The 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 aircraft 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 ==========
**NOTICE: In accordance with 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.** ==========