Jetride Inc. Grounded
Last updated Tuesday, November 4, 2008 10:47 AM CST in Business
By Kim Souza
THE MORNING NEWS
SPRINGDALE -- Not quite six years after it started, Jetride Inc. (formerly known as Pinnacle Air LLC), has surrendered its flight operating certification to the Federal Aviation Administration. On Monday, all planes were officially grounded and the company's operations as an airline ceased, said Roland Herwig, a spokesman for the FAA in Oklahoma City.
The Northwest Arkansas-based charter airline service unofficially closed its doors Friday, telling its 20 or so pilots and a few dozen employees not to return to work on Monday.
At the height of the company's operation in the spring of 2007, it employed 140 people, with a fleet of 27 jet aircraft. The exact number of local jobs losses have not yet been determined.
In April, Jetride said it operated a fleet of 26 planes valued in excess of $100 million.
Bill Schwyhart, company founder, did not return messages left on both a cell phone and office phone Monday. E-mail requests sent to Schwyhart and other former executives on Monday also went unanswered and there was no answer at Jetride's charter booking offices throughout the day on Monday.
Financial troubles were rumored about the airline as partners Johnelle Hunt and Tim Graham sought to leave the group in December. They asked the remaining three partners -- Schwyhart, Robert Thornton and John Calamos -- to refinance the company's debt in their own names, absolving both Hunt and Graham from future liability. The amount was estimated to be no more than $15 million the remaining partners would need to raise by the end of March, according to a legal complaint filed in Benton County between the partners in July.
Hunt and Graham sued the remaining partners for breach of contract and deceptive trade practices, citing that the defendants had the financial capacity to honor their commitments with respect to the refinancing and did not. The suit was filed in Benton County on July 31.
The litigation continues between the partners, according to John George, a spokesman for both Hunt and Graham.
George said that Hunt and Graham are sole owners of a company called Pinnacle Air Services, the fixed base operation at the Springdale Airport, that was not impacted with Jetride's closure. He said the FBO is basically a fuel station and its employees were not impacted. George also indicated the name of the FBO is being changed. George said there is no connection between Pinnacle Air Services and Pinnacle Jetride. He was clear that Hunt and Graham separated from Pinnacle Jetride in December.
Pinnacle Jetride is a tenant at J.B. Hunt Towers in Rogers. George said Monday he has not been advised that there is any change in their occupation of those offices.
The charter airline has been operating as Jetride Inc. -- Aspen-Jetride since the owners purchased the assets of Colorado-based Aspen Air out of Chapter 11 Bankruptcy in Oct. 2007. It was at that time Calamos, a Chicago investor, was brought in as a fifth partner. Shortly thereafter, both Hunt and Graham divested themselves from the airline.
Charter air services were a fast-growing travel segment just 18 months ago. Business travelers saw the time-saving advantages that charter services could offer. An executive could fly cross-country and back, holding meetings in different locations, and still be home to see the kids before bedtime.
Just a few months ago, charter airfare quoted by an online brokerage company indicated services ranged from $2,100 per hour on a Learjet 31A, which seats up to eight, to $5,200 per hour for 12 seats on a Gulf-Stream IV, seating 12. Economists said charter prices were clearly for those travelers who did not mind paying handsomely for convenience.
The bulk of charter air services is bought by corporations, as well as entertainers seeking to travel in anonymity, according to Dan Hubbard, spokesman for the National Business Aviation Association.
Businesses big and small have greatly scaled back their travel during this economic downturn, said Kathy Deck, director for the Center for Business and Economic Research at the University of Arkansas. She said companies that once sent a small team to close a deal are now closely evaluating the need to send anyone, or maybe just one, which is hurting airlines of all sizes.
"I recently heard caterers saying low-margin food items were now being favored by businesses that once ordered caviar. Expensive air charter services could be viewed as caviar -- nice but not necessary," Deck said.
At A Glance
Timeline
April 2002: Bill Schwyhart formed Pinnacle Air LLC with the purchase of a single Diamond jet aircraft.
2003: J.B. Hunt, Tim Graham and Robert Thornton joined as partners and Pinnacle expanded to two fixed based operations with two Learjet aircraft added to the fleet.
2005: The company's fleet size grew to 12 aircraft flying throughout North America.
September 2006: The Pinnacle Group acquired Columbus, Ohio-based Jetride for $41 million. The move almost doubled the size of the operation, adding nine aircraft and 60 employees.
March 2007: Pinnacle Air, operated under the name Jetride had expanded its fleet to 27 aircraft, 140 employees operating from 12 airports across the U.S.
October 2007: John Calamos, a Chicago billionaire and international investor, was brought in as a fifth partner in Jetride and the group expanded the airline by acquiring the assets of Colorado-based Aspen Air out of Chapter 11 Bankruptcy.
December 2007: Johnelle Hunt and Tim Graham sought to exit the partnership and signed an agreement with other partners who were to secure $15 million in financing within 90 days and relieve both Hunt and Graham of their ties to the outstanding debt.
July 2008: Hunt and Graham sued the other three partners for breach of contract for not honoring the financial terms agreed to in December.
Friday: Jetride Inc. told its employees not to return on work on Monday.
Monday: Jetride Inc. doing business as Aspen-Jetride surrendered its flight operating certificates to the Federal Aviation Administration.
Sources: Staff Reports; Jetride Inc., formerly a Pinnacle Group Co.; Benton County Legal Filings
Reader Comments (5 comment(s))
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django wrote on Nov 4, 2008 12:56 AM:
BERD wrote on Nov 4, 2008 3:10 PM:
LJpilot wrote on Nov 4, 2008 8:44 PM:
What should be said is that Calamos is a billion air and has bankrupted 2 companies within 12 months. I think he should pay his debts and quit hiding behind corporations and LLCs. A lot of people now must sell their houses, move, and possibly change careers while he continues on as a billion air. "
Not already registered?
nice wrote on Nov 3, 2008 8:24 PM: