Ricci back in left seat at Flight Options
Cleveland-based Flight Options came full circle late last month when it named company founder Kenn Ricci chairman, ending months of speculation that he would again take the helm of the fractional provider. In addition, Flight Options appointed Mike Silvestro the new CEO, replacing former chief executive S. Michael Scheeringa, who will remain an investor in Flight Options and a “strategic advisor at the board level,” a spokesman said.
The move was not unexpected–one source told AIN specific details of the management shuffle weeks before the official announcement on July 21–and might be only the beginning of more management changes at the company, according to several industry sources. In fact, the sources specifically suggested that vice president of sales and marketing Phillip LaVelle, COO Sanjay Aggarwal, vice president and CFO Bruce Boyle and vice president of West Coast sales Pat Gallagher would be the next ones to leave the company.
The Flight Options spokesman would not confirm whether any of these executives had departed or would part ways with the company, and at press time the “About Flight Options Leadership” page on its Web site had been removed.
Ricci returns to Flight Options 10 years after founding the fractional provider and six years after selling it to Raytheon. In November, Raytheon sold the company to Miami-based H.I.G. Capital, and in April Ricci took a minority share in Flight Options, as well as a seat on its board. Silvestro is also returning to the company, where he was vice president of sales and marketing from 2000 to 2005. He most recently held a senior executive position with a “leading fractional provider.”
“Kenn is a true visionary in the aviation industry,” said H.I.G. Capital executive managing director Doug Berman. “He has a tremendous track record of building great businesses with a focus on high-quality customer service.” According to fractional aviation consultants that AIN contacted, poor customer service at the fractional provider is the primary driving force behind the company’s negative growth over the past two years.
In late May, Flight Options announced a downsizing, closing its maintenance facility at Cleveland Cuyahoga Airport and dismissing about 200 employees, about 70 of whom were pilots.
In a statement, the company said poor economic conditions and a “reduction in demand” have caused it “to scale the business to match current and future needs and to maintain the overall health of the company.” Its fractional jet fleet was pared to 120 aircraft, down five from June and 20 fewer than in December.
Fractional industry analysts Mike Riegel of Fractional Insider and Kevin O’Leary of Jet Advisors both said Flight Options’ net sales were down about three aircraft in the first six months of this year, with Riegel telling AIN that Flight Options has been the “worst performer by far” of the major fractionals this year. Meanwhile, they said, the other major fractionals continue to grow, even if at an anemic pace compared to the past few years.
In addition to attempting to turn the company around, Ricci and Silvestro will also have to deal with pilot labor issues. Flight Options’ pilots voted to be represented by Teamsters Local 1108 in March 2006 and have yet to secure their first contract, creating angst among the rank and file. The company’s pilots are incensed that the flight crew eliminations in May were done regardless of seniority and were based on “performance,” a yardstick the union contends is too vague. It is considering filing a lawsuit over the terminations. A spokesman said that the management change won’t have any adverse effect on the pilot negotiation schedule.