INFORMATION REQUEST

FLORIDA WEST INTERNATIONAL AIRWAYS. INC.

Dockets OST-97-2646 and OST-97-26481

 

Ownership

 

1. FWIA states in its July 24 reply to Fine's answer to FWIA's renewal application that "there has been no change in the holding company through which Mr. Rasnavad owns his FWIA stock." Notwithstanding the fact that Mr. Rasnavad provided funds to FWIA through Equipment Power, a company he owns, none of the information provided in the initial transfer application (Docket OST-95-418) stated that Equipment Power was the actual holder of FWIA's stock; rather, FWIA repeatedly stated that the stock was held by Mr. Rasnavad himself. Please explain this discrepancy.

 

2. Initially, 25 percent of FWIA's stock was held by Fast Air. Now it appears that that stock is held by International Aviation Services, which FWIA states is owned by "several of the principals of" Fast Air. In Order 96-8-6, the Department ordered FWIA to advise the Department of any changes in its U.S. or foreign ownership. When did the transfer of the FWIA stock from Past Air to International Aviation Services occur? Please explain why FWIA did not advise us of this apparent restructuring of the Chilean ownership of the carrier at that time.

 

3. Provide the following information with respect to Equipment Power and International Aviation Services:

 

a. What is the address and business of Equipment Power? Is it a citizen of the United States as defined in the Statute?

 

b. What is the address and business of International Aviation Services? Provide the information required by section 204.3(g) of our rules for each person/entity that holds a substantial interest in this company.

 

c. Provide the compliance information required by sections 204.3(1), (m), (a), (p), and (q) of our rules for Equipment Power, International Aviation Services and their principals.

 

d. Provide balance sheets and 12-month income statements for Equipment Power and International Aviation Services (including any applicable explanatory notes) for the most recent calendar or fiscal year, and for a period ending not more than three months prior to submission to the Department.

 

 

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Operations & Financial

 

1. It is our understanding from the information provided that FWIA is currently operating one DC-8-61 aircraft and wet-leasing eight other aircraft. Is this correct? If not, please clarify. If this is correct, based on the forecasts provided, for the remainder of 1997 and for 1998, FWIA is projecting a substantial increase in revenues and profits from its operations than it experienced in past months using what appears to be approximately the same number of aircraft. Please elaborate on the reasons for the assumptions behind these projections. Are any of the current wet-leased aircraft being obtained from Fast Air or Lan Chile or any of their affiliates?

 

2. FWIA states that it is planning to add a second DC-8-71 aircraft to its certificate in September. Is this aircraft one of the DC-8's it is obtaining from Fast Air on an interchange basis? If not, please clarify. FWIA estimates that it will cost approximately $75,000 to add the DC-8-71 aircraft to its certificate. What is included in this estimate and how was the amount derived?

 

3. In December 1996, FWIA advised the Department that it had obtained a $2 million line-of-credit from Atlas Air Cargo and was obtaining an addition $1 million credit line from Mercury Air Group. Does FWIA still have these credit facilities? If not, why not? If so, to what extent are the credit lines currently drawn down?

 

4. At the time of our August 1996 transfer order, FWIA's outstanding debt obligation to Fast Air was $840,000. According to its present application, FWIA currently owes Fast Air approximately $1.25 million. When did FWIA borrow the additional money from Fast Air? Provide a copy of any loan agreement entered into between the parties.

 

5. FWIA states that it intends to pay down approximately $600,000 of the debt owed to Fast Air. Given the company's current negative working capital position, what financial resources does FWIA plan to use to pay off this obligation?

 

6. Explain the nature of the $411,066 accounts receivable-related parties item on FWIA's December 31, 1996, balance sheet. Explain the $439,685 advance for aircraft lessor-related party item on the same balance sheet. Who are the referenced "related parties"?

 

7. We note that there is a significant discrepancy between the working capital shown on the Form 41 Schedule B-l.1 (balance sheet at December 31, 1996) filed earlier this year with the Department's Bureau of Transportation Statistics (BTS) and the working capital reflected in the company's audited financial statement filed with the instant application. Specifically, the B1.1 shows the company to have approximately $35,000 in positive working capital. The audited statement at the same date reflects negative working capital of approximately $1.95 million, a difference of almost $2 million.

 

a. Explain the reason for the difference in the two financial statements.

 

 

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b. We have been advised by BTS that it has not received a revised B-l.1 from FWIA correcting its earlier Form 41 filing. If FWIA has not submitted a revised B-l.l, explain why it has not done so and when it will be filed.

 

c. The April 30, 1997, balance sheet included with its application does not appear to be an audited statement. Given the discrepancy noted above between the December 31, 1996, B-1.1. and FWIA's audited financial statements, what assurances can FWIA provide that the information in the April 30, 1997, balance sheet accurately reflects the carrier's financial position at that date. Has there been any significant changes in the company's financial position since the April 30 statement? If so, describe any such changes.

 

8. The post-recapitalization balance sheet also shows a "notes payable due" of $250,000 under its "current liabilities" What is this obligation and to whom will it be owed?

 

Other

 

1. Based on the information provided, it appears that the proposed interchange agreements between FWIA and Fast Air were executed prior to their submission to the Department. While we recognize that FWIA has submitted the documents in advance of the actual operation of the proposed aircraft, please explain why these documents were not submitted to the Department prior to their execution, as required by Order 96-8-6.

 

2. FWIA states that it is "in the process" of adding the DC-8-71 to its FAA operating specifications. What is the current status of that process?