NEWPORT NEWS — While newly named People Express CEO Jeffrey Erickson has plenty of industry experience, it was his financial acumen that was key, according to Michael Morisi, president of the fledgling airline.
"He's reviewed our model and our plan, and he brings a significant level of startup experience as well as financing and funding experience," Morisi said. "His leadership here will bring a great deal of credibility to investors."
Erickson's first day with the company is expected to be Tuesday.
According to a People Express press release touting Erickson's accomplishments, he is credited with guiding Atlas Air Worldwide Holdings through bankruptcy when he served as the company's CEO. People Express said the company "emerged in less than six months with approximately $1 billion in value restored to the enterprise."
Erickson also helped Trans World Airlines achieve its first annual operating profit in six years during his time at president and CEO of the company according to People Express.
After a wait of more than a year and half, for the first time People Express named a CEO on Wednesday. The identity of the company's CEO has been shrouded in secrecy for some time. In February of 2012, Morisi declined to name the group's chief executive, citing a non-compete clause.
But Morisi said Thursday the company's hire is a different person than the original CEO mentioned last year. Morisi was mum on why the previous potential CEO didn't come aboard. "We changed our plans," he said in a phone interview with the Daily Press Thursday.
When he spoke with the Daily Press via phone on Thursday, Erickson said he was intrigued by the opportunity of launching the airline."
I am excited about it because you're taking what is an iconic name in the industry and kind of linking it with markets that need good service. It's a great opportunity. It's my belief as a result it will be quite successful," he said.
The Newport News-based People Express Airlines Inc., hopes to launch service in the second quarter of 2014. Morisi said he still did not know which month the service would be available. He declined to name any routes the company would fly to. "We're not really in a position to make announcements on our routes yet," he said. Morisi said he hoped he would be able to make an announcement soon, however.
Officials at Newport News Williamsburg International Airport hope that the fledgling airline can help replace some traffic lost when AirTran Airways pulled out of the airport. Since AirTran left there have not been any direct flights to the New York metropolitan area from the Newport News airport.
Morisi said the company has rehired several workers furloughed in August. In August the company released six workers as it said it was trying to get finances in order to launch.
Morisi said the government shutdown has not affected the efforts to launch the airline. "The FAA hasn't been impacted. The Department of Transportation has, but we're not in the middle of anything with the DOT," he said.
PEOPLExpress Airlines, Inc. Purchases Existing Airline
NEWPORT NEWS, Va. - PEOPLExpress Airlines, Inc., the start-up airline currently based in Newport News, Va., has acquired XTRA Airways. PEOPLExpress and TEM Enterprises, operator of XTRA Airways, announced the agreement today.
Based in Boise, Idaho, XTRA Airways is certificated by the FAA to conduct Flag, Domestic, and Supplemental operations with Boeing 737 aircraft. The agreement gives PEOPLExpress the immediate ability to operate aircraft under the FAA certificate issued to XTRA.
“The purchase of XTRA Airways fits well into the PEOPLExpress long term business model,” said Mike Morisi, president of PEOPLExpress. “Their talented team of airline industry specialists has maintained excellent relationships with the FAA, its customers, and industry leaders for more than 25 years.”
PEOPLExpress plans to maintain and develop the XTRA Airways brand along with their own. “At this time it makes perfect sense to continue the XTRA brand for our charter service model,” Morisi said.
XTRA Airways was established in 1987, and is authorized to operate in the United States, Caribbean, Canada, Mexico, Central and South America, and more. Its charter customers include sports teams, government agencies, foreign dignitaries, press corps, casinos, and other organizations.
PEOPLExpress is a new airline option that provides value-conscious business and leisure travelers the opportunity to travel to destinations in both major and underserved markets. The company offers a refreshing customer service experience and the promise of affordable, comfortable air travel. PEOPLExpress shares its name with a popular airline that operated from 1981 to 1987 as a low cost option that delivered on that promise.
Michael Morisi, PeoplExpress president, said the company could announce the carrier it's purchasing as soon as Feb. 1.
"We did close a small loan with the City of Newport News Economic Development Authority, and have placed a deposit on the acquisition of an existing certificated air carrier," Morisi said last week. "We are getting close to finalizing the due diligence and when we do, we will be permitted to announce the name of the carrier and our plans."
The $500,000 loan from the Regional Air Service Enhancement Committee of the EDA is a short-term, non-interest loan.
"Within about 10 days we will announce the carrier we are acquiring, ou r new CEO and additional funding information as well as a target launch date that is very realistic," Morisi said.
PeoplExpress is still awaiting certification from the Federal Aviation Administration.
The airline is a revival of an airline of the same name that started in 1981. By 1985, it was generating $1 billion in annual revenue. It was bought by Continental in 1987 and later stopped flying.
AirTran shuttered its service at the airport in March of last year, causing a huge blow to passenger activity at the airport. As of November, the airport had seen a 38.4 percent drop in activity, from 804,806 passengers during the first nine months of 2011, to 495,596 for the first nine months of 2012.
If approved, hundreds of thousands of dollars would help the iconic 1980s airline relaunch by late spring with its world headquarters at the Newport News-Williamsburg International Airport, according to People Express president Michael Morisi.
Florence Kingston, the Newport News economic development director, said at a City Council workshop session Tuesday that the Regional Air Service Enhancement committee — which calls itself RAISE — is slated to meet on Wednesday, with action expected to be taken after a closed session.
Kingston said the committee, while a public body, can deliberate contracts in closed session under a Freedom of Information Act exemption.
From there, a contract would have to be signed by the Newport News Economic Development Authority.
Kingston has said that RAISE — which is a taxpayer-financed group funded by communities on the Peninsula, including Newport News, Hampton, York County and James City County — is being asked by People Express to assist in the purchase of an undisclosed charter airline.
Kingston said the taxpayer financing is not yet being disclosed, but it would be less than $1 million. She said the money would be refundable if People Express failed to start operations.
Morisi said in a brief interview on Tuesday that the money would help People Express purchase the charter airline and its five airplanes by the end of February.
"I hate to give dates, but we should be operating before the summer begins," Morisi said.
Morisi declined to say how much the airline would cost or what types of airplanes are being purchased, noting that it was part of confidential negotiations.
But he said he's appreciative of the potential taxpayer support.
"It's a positive sign to investors if the community is willing to support us," Morisi said.
Councilwoman Pat Woodbury said she would rather that the money given to People Express be a loan.
"If this helps them be successful, then they should have to pay it back, so that we'll have the money for other incentives for other airlines," said Woodbury, who doesn't have a vote on the issue. The RAISE committee is made up of economic development officials from Peninsula communities.
People Express originally announced in February 2012 that it would begin service in summer 2012 to Pittsburgh, Orlando and other cities. Those dates were pushed back after some of the initial financing fell through, Morisi said.
But Morisi said things are back on track, and that starting an airline "from scratch" is typically a two-year process because of complex Federal Aviation Administration regulations.
Ken Spirito, the airport's executive director, said increased service could only help the airport.
"People Express is an opportunity," Spirito said. "It seems to have some good momentum."
Spirito said the airport lost 39 percent of its passengers in 2012 due to Delta scaling back service and the loss of AirTran in March after its merger with Southwest Airlines. That was after more than 10 years averaging 8 percent growth per year, he said.
Meanwhile, an informal group of business and community leaders headed by former Mayor Joe Frank is advocating for People Express and for increased airport service.
"People Express has challenges getting started, but I think they're meeting those challenges," Frank said. "If we can, we can get them jump started."
Colin Campbell, president of the Colonial Williamsburg Foundation and a member of Frank's group, said adding service to the airport is an important goal. He said many tourists to the region would choose air service.
"There's a major economic imperative here," Campbell said. "AirTran service was very successful here. We would very much like to see that returned."
People Express meeting
The Regional Air Service Enhancement committee is scheduled to meet 3:30 p.m. Wednesday at the banquet room at Newport News-Williamsburg International Airport. The committee is expected to discuss whether to give taxpayer assistance to help People Express airline launch at the Newport News airport. The meeting is open to the public, but much of the discussion will be in closed session, according to Florence Kingston, the Newport News economic development director.
WAVY.com provided television coverage of our launch event. For those readers who aren't familiar with the abbreviation "NN", that's local speak for "Newport News", part of the coverage area of this TV station. Check it out!