OST-97-2646 / OST-97-2648 / Certificate Renewal / October 28, 1997
Ms. Delores King
Air Carrier Fitness Division
Office of Aviation Authorization
X 56 Department of Transportation
400 7th Street, S.W.
Washington, D.C. 20590
Re: Florida West International Airways, Inc.—Renewal Application
Dear Ms. King:
On behalf of Florida West International Airways, Inc. (FWIA), I am responding to your request for additional information regarding FWIA's certificate renewal application in Dockets OST-97-2646 and 2648.
1. I am providing an updated balance sheet for FWIA adjusted to show the effect of the planned recapitalization. The attached balance sheets reflect FWLA financial status as of August 31, 1997, both before and after recapitalization. We have also included a statement of operations which details FWIA's increasing revenues for the months of May through August 1997.
2. FWIA would also like to take this opportunity to clarify information it submitted regarding the date IAS was spun off from Fast Air. In Amendment No. 2 to its renewal application, FWIA stated that IAS had been spun off from Fast Air on or about July 31, 1997. While the actual implementation of the spinoff did not occur until July of this year, the spin off agreement was actually finalized in November 1996.
3. LAS has not been, nor is it now, an operating company. Because IAS remains a closely-held private investment company, the company does not maintain any financial statements. The three principals of IAS are also the principals of Lan Chile and Fast Air -the Cueto Family (Inversiones Teinco Limitada), the Sebastian Pinera Echenique Group (Inversiones Bancard Limitada) and Mr. Boris Hirmas Rubio (Sociedad de Inversiones
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Generales Transnet Limitada). They have been and remain the real parties in interest vis-a-vis their twenty-five percent interest in FWIA. The only change which has occurred as a result of the spinoff is that there is a different intermediary company which links the three principal groups to IAS. Instead of Lan Chile and Fast Air functioning as intermediaries between the three principals and their investment interest in FWIA, the new intermediary is San Alberto S.A., a Chilean investment company. It is held in the same percentages by the three principals as their interests in IAS. The change in corporate structure which occurred as a result of the spinoff has therefore had absolutely no effect on the principals' ownership and control of their twenty-five percent interest in FWLA. Insofar as the issue of facial statements is concerned, a financial statement in the case of IAS would only have relevance if the particular holding company also had substantial liabilities thereby raising the theoretical possibility that the holding company might be a candidate for bankruptcy. That, however, is not a realistic possibility in this situation. The three principals have substantial financial resources and their willingness to endure the protracted initial FWIA proceeding is compelling evidence of their commitment to maintain their investment relationship with FWLA. Further, the LIPS holding company itself has no debt.
4. Like IAS, Equipment Power functions solely as a personal holding company. Mr. Rasnavad has been and remains the only party in interest and sole shareholder of Equipment Power. Since Mr. Rasnavad is the sole shareholder of Equipment Power and Equipment Power's only assets consist of Mr. Rasnavad's FWLA stock and one bank account, Mr. Rasnavad does not maintain financial statements for Equipment Power. Once again, however, the only theoretical concern might be if Equipment Power had precarious levels of debt. In fact, Equipment Power has no debt whatsoever.
5. Although we believe the following information is probably outside the scope of that required by the Department's Regulations, we do want to apprise the Department of one matter which has come to our attention subsequent to our last filing. In December 1996, the Chilean Antitrust Commission charged Lan Chile, Ladeco and another Chilean airline (which is unrelated to Lan Chile/Fast Air's principals) with certain anticompetitive practices in conjunction with another Chilean regional airline which operates exclusively within Chile. Specifically, the airlines were charged with engaging in anticompetitive and predatory behavior because of their refusal to continue to provided maintenance services to the regional airline and their offer of lower fares in certain markets in an alleged effort to adversely affect the regional airline. This matter was concluded in July 1997 with a payment by the parties of a $340,000 fine to the Chilean Antitrust Commission. Lan Chile, Ladeco and Fast Air, including their principals and subsidiaries, have not been previously charged with any such practice nor have any such charges been subsequently filed.
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6. FWIA would also like to apprise DOT that the compliance information which the Lan Chile/Fast Air principals set forth in their affidavits also applies to the Fast Air principals in their individual capacity, to their three principal holding companies (Teinco, Transnet and Bancard) as well as to lAS. Specifically, none of these individuals or the referenced entities has any outstanding judgments of $5000 or more, none have been named in any complaint issued by the FAA or the Department and none have been charged with unfair, deceptive or anticompetitive business practices, fraud, felony or antitrust violations. The only such matters even indirectly related to Lan Chile and Fast Air are the several enforcement orders against Fast Air which are a matter of public record and the above described and now concluded Chilean Antitrust Commission proceeding against Lan Chile
Sincerely yours,
Marshall S. Sinick
cc: Ms. Patricia Thomas
Mr. John V. Coleman
Jeffery Shane, Esq.—Counsel to Fine Airlines, Inc.
Balance Sheet Before Recapitalization
Balance Sheet After Recapitalization