Order 2015-4-16 Served: April 20, 2015 UNITED

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Order 2015-4-16 Served: April 20, 2015 UNITED Order 2015-4-16 Served: April 20, 2015 F TRA T O NS UNITED STATES OF AMERICA N P E O M R T T A R T DEPARTMENT OF TRANSPORTATION A I P O E N D OFFICE OF THE SECRETARY U N A IT IC E R D E WASHINGTON, D.C. ST AM ATES OF Issued by the Department of Transportation on the 20th day of April, 2015 Applications of EASTERN AIR LINES GROUP, INC. Docket DOT-OST 2014-0012 Docket DOT-OST-2014-0013 for certificates of public convenience and necessity, under 49 U.S.C. § 41102 to engage in interstate and foreign charter air transportation of persons, property, and mail ORDER TO SHOW CAUSE PROPOSING ISSUANCE OF CERTIFICATE AUTHORITY Summary By this order, we tentatively find that Eastern Air Lines Group, Inc., (“Eastern”) is a citizen of the United States and is fit, willing, and able to conduct interstate and foreign charter air transportation of persons, property and mail as a U.S. certificated air carrier; and should be issued certificates of public convenience and necessity authorizing such operations, subject to conditions. Background Section 41102 of Title 49 of the United States Code (“the Transportation Code”) directs us to determine whether companies proposing to engage in interstate and foreign charter air transportation are “fit, willing, and able” to perform such service, and to comply with the Transportation Code and the regulations and requirements of the Department. In making fitness findings, the Department uses a three-part test that reconciles the Airline Deregulation Act’s liberal entry policy with Congress’ concern for operational safety and consumer protection. In addition to determining that the applicant is a U.S. citizen, the three areas of inquiry that must be addressed in order to determine an air carrier’s fitness are whether the applicant: (1) will have the managerial skills and technical ability to conduct the proposed operations, (2) will have sufficient financial resources to commence the operations proposed without posing an undue risk to consumers, and (3) will comply with the Transportation Code and regulations imposed by Federal and State agencies. On January 28, 2014, Eastern filed applications in Dockets DOT-OST-2014-0012 and DOT-OST-2014-0013 for authority to conduct interstate and foreign charter air transportation of persons, property, and mail pursuant to section 41102 of the Transportation Code. Eastern accompanied 1 its applications with fitness information required by section 204.3 of our regulations. On June 3, 2014, Mr. Sean Raimbeault filed a comment objecting to Eastern’s applications, alleging that certain of Eastern’s investors had engaged in fraudulent actions. Shortly thereafter, on June 18, 2014, Mr. Raimbeault filed suit against these investors, among others, in the U.S. District Court for the 2 Southern District of Florida. On November 26, 2014, the civil lawsuit was dismissed with the consent of all parties. In addition, on January 21, 2015, Eastern submitted a statement signed by Mr. Raimbeault recanting his earlier statement, claiming that his objection had no factual basis. No other answers were filed to the applications and no special issues regarding the applicant have come to our attention. Under these circumstances, we propose to decide the issue of the applicant's fitness on the basis of the written record, and we tentatively conclude that Eastern is a U.S. citizen and has met the fitness test to conduct interstate and foreign charter operations. We will, however, give interested parties an opportunity to show cause why we should not adopt as final the tentative findings and conclusions stated herein. FITNESS The Company Eastern, a non-operating entity, was founded in 2011 by Mr. Edward J. Wegel, a U.S. citizen, for the purpose of acquiring the intellectual property of the estate of the former Eastern Air Lines and launching a new air carrier. The applicant is incorporated as a Delaware company with corporate offices in Miami, Florida. Eastern has issued two classes of stock, preferred and common, both of which have voting rights. The largest shareholders, owning more than 10 percent of the stock, are VV-DC Eastern Investments, LLC (“VV-DC”) (61.2 percent) and 1848 Skyworks LLC (“Skyworks”) (16.95 percent). The remaining shareholders own an aggregate of 21.83 percent of the shares: PPO Stockholders 3 (7.84 percent), ACPG LLC (“ACPG”) (7.12 percent), Mr. Wegel (3.33 percent), Pitcairn Aviation LLC 4 (“Pitcairn”) (2.37 percent), and Mr. William Owens (1.14 percent). Managerial Competence Eastern’s Board of Directors consists of the following six individuals, all of whom are U.S. citizens: (1) Mr. Vincent Viola (Chairman), (2) Mr. Douglas A. Cifu (Vice Chairman), (3) Mr. Joseph DaGrosa, Jr., (4) Mr. Edward J. Wegel, (5) Admiral (Ret.) William A. Owens, and (6) Mr. Manuel Diaz. Mr. Vincent Viola, the majority shareholder of both Eastern and VV-DC, is the Chairman and Owner of the Florida Panthers hockey team (2013-present). Mr. Viola is the Founder and CEO of Virtu Financial (2008-present) and the Founder and Owner of Independent Banking Group (1996-present). 1 Eastern requested confidential treatment of stockholder agreements and various other capitalization documents as well as copies of the FAA licenses held by certain of its key personnel. By letter dated March 11, 2015, the Department granted the applicant’s request in part and directed that certain material be redacted and filed in the public docket in this proceeding, which Eastern did on March 12. Eastern filed information supplementing its applications most recently on April 15, 2015. 2 See Raimbeault v. Accurate Machine and Tool, LLC., No. 14-CIV-20136 (S.D. Fla 2014). 3 PPO Stockholders is a group of 22 private investors that collectively hold 7.84 percent of Eastern’s common stock, with no individual investor holding more than 1.56 percent. 4 A more detailed description of Eastern’s ownership is contained in the CITIZENSHIP section of this order. Mr. Douglas A. Cifu also represents VV-DC’s interests on the Eastern Board of Directors. He is the Vice-Chairman of the Florida Panthers hockey team (2013-present) and the Co-Founder and Vice Chairman of Virtu Financial (2008-2013), and most recently its President and CEO (2013-present). Previously, he was an Associate and Partner with the Law Firm of Paul, Weiss, Rifkind, Wharton and Garrison LLP (1990-2008). Mr. Joseph E. DaGrosa, Jr. represents the interests of Skyworks on Eastern’s Board of Directors and is the Co-Founder of 1848 Capital Partners LLC, a private equity firm (2003-Present). Previously, Mr. DaGrosa was the Founding Partner of MapleWood Partners LLC (1996-2003) and a Vice President of Special Accounts with Paine Webber Inc. (1986-1996). Mr. Edward J. Wegel, President and CEO of Eastern since its inception, has had a lengthy career in the airline industry. In addition to serving in his current capacity with the applicant, Mr. Wegel is also the Founder and Managing Partner of investment company Aviation Capital Partners Group, LLC (2008- present) as well as Aviation Capital Partners LLC (1993-present). He was also the Chief Restructuring Officer and CEO of One Travel Holdings, Inc. (2004-2008); Executive Vice President, Planning and Development of Mesa Air Group, Inc. (2003-2005); Chief Operating Officer at Tower Airlines (2000- 2002); and Senior Vice President with SH&E, an aviation consulting firm (1999-2002). Mr. Wegel also served as President and CEO with Chautauqua Airlines/USAirways Express (1997-1999); President and Chief Operating Officer with BWIA International Airways (1995-1997); Co-Founder, Board Member, and Senior Vice President-Finance of Atlantic Coast Airlines (1991-1995); and Vice President with Shearson Lehman Brothers (1987-1991). Mr. Wegel also served as a Captain in the U.S. Army (1980- 1985). Admiral (Ret.) William A. Owens is the Chairman of AEA Investors (Asia) Limited (2009-present). He previously was the Executive Chairman and CEO of AEA Holdings Asia (2005- 2009). He also was CEO and Vice Chairman of Nortel Networks Corporation (2004-2005), CEO and Chairman of Teledesic LLC (1998-2004), and President, CEO, and Vice Chairman with SAIC (1997-1998) and its Vice President for Government (1996-1997). Prior to his public sector career, Admiral Owens held several positions with the U.S. Navy, including Vice Chairman of the Joint Chiefs of Staff (1994-1996), Deputy Chief of Naval Operations (1991-1993), Commander of the U.S. Sixth Fleet (1990-1991), Senior Military Assistant to the Secretary of Defense (1988-1991), Director of the Office of Program Appraisal for the Secretary of the Navy (1988) and Commander of Submarine Group Six (1987). Mr. Manuel Diaz is the former mayor of the city of Miami, Florida (2001-2009). He is currently the Senior Partner with Lydecker Diaz Law Firm (2010-present). Mr. Diaz also held the position of Vice President and General Counsel of both Monty’s Restaurant Holdings (1991-2001), and Terremark, Inc. (1986-1991). He was also a Partner with Berkowitz & Diaz (1980-1985). Eastern’s key management personnel consist of the following individuals, all of whom are U.S. citizens: Mr. Edward J. Wegel Founder, President, and Chief Executive Officer (“CEO”) Mr. James R. Tolzien Chief Financial Officer (“CFO”) Mr. Terry Lee Pentecost Director of Maintenance Mr. John Furneaux Vice President, Flight Operations Mr. Terry C. Austin Director of Safety Mr. Michael Jefferson Chief Inspector Mr. Juan P. Nunez Chief Pilot Mr. James R. Tolzien is Eastern’s CFO, a position he has held since June 2014. Previously he was the Operating Partner and CEO of Sunbelt Diversified Enterprises, LLC (2007-June 2014). He was the President (2003-2007) and CFO (2000-2003) of Around the World Travel Inc., Operations and Finance Director with Dancing Bear Investments (1997-1999), and Senior Vice President of North American Operations (1996) and Vice President of Finance (1997) with Alamo Rent-A-Car.
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