Aviation support firms unite in search of federal dollars
By Jaime Levy
As commercial airlines look for stability through a $15 billion aid package from the federal government, support businesses are seeking state and federal assistance to alleviate their own lagging incomes - and nine Florida representatives in Washington, DC, have pledged backing to the cause.
Airline service providers - including maintenance companies, fuel vendors and parts distributors - have been suffering since the Sept. 11 attacks caused a drastic slowdown in the airline industry.
A group of South Florida aviation companies have formed the Coalition of Airline Providers to try to keep these aviation-support businesses from crashing. The group sent a letter Tuesday to the heads of 21 airlines, asking them to "resume paying our member companies in a timely manner for work, product and services provided."
With a representative in Washington, DC, the group is pushing the state and federal governments to provide relief for the industry both in Florida and nationwide.
Coalition representative Andrew Wahlquist, who has worked in the Florida aviation industry for five years, said the Oct. 5 letter from members of Florida's congressional delegation - including reps. Lincoln Diaz-Balart, Carrie Meek and Ileana Ros-Lehtinen of Miami - was an important step toward ensuring that the airlines aided by the federal relief package will pay their vendors and service providers efficiently.
Next, he said, the organization will continue to lobby Gov. Jeb Bush for his support in procuring economic disaster area status for the Florida aviation industry - a classification that would make many small companies eligible for zero- or low-interest disaster loans.
In the letter sent Oct. 5 to Secretary of the Treasury Paul O'Neill, Office of Management & Budget Director Mitchell Daniels and Secretary of Transportation Norman Mineta, the congressmen expressed their concerns about the faltering airline support industry.
"We have been told that many airlines have sent notifications to cancel pending work orders and have also notified the maintenance repair and overhaul stations that they have no timetable to pay them for repair work already completed," the representatives wrote.
"Due to their heavy reliance on the airline industry, we ask for your assistance to ensure the airlines meet their financial obligations to these companies. They are hard-working Americans being put out of work because of the airlines' inability or unwillingness to pay for services rendered."
The airline support industry, an estimated 1,485 companies in Florida, consists primarily of small companies - about 75% of them have fewer than 50 employees, according to a Sept. 25 report by Enterprise Florida and several state aviation trade associations. About 80% of the survey's respondents said they would likely have to lay off a portion of their workforce.
Avborne Accessory Group, in Miami, which services aircraft parts, has already had to cut its staff, said Frank Watts, director of business development. Usually, Mr. Watts said, it takes airlines about 45 days to pay their bills. Now, he said, he is expecting waits of 90 to 100 days.
"The airlines stretched us out and continue to stretch us out with paying bills," said Mr. Watts, who added that his company has lost about 30% of its business and has laid off 30 of 200 workers in anticipation of continuing problems. "It's going to kill our cash flow."
Also, Mr. Wahlquist said, the coalition is seeking tax cuts or incentives and is working to ensure that airline-support employees are included in plans to help people unemployed in the attacks' aftermath.
"It's a highly technical, skilled labor force," said CAP Chair Virgil Pizer, owner of Patriot Aviation Services, a maintenance and repair company in Fort Lauderdale. "Once you deteriorate that base, you can't get it back as rapidly as you can get clerks or maids for the hotel industry.
"When we get to a point where this thing turns around, we won't be able to keep up with it because the workforce won't be there to support it."
Mr. Pizer said that before Sept. 11, his company saw about five aircraft on the ground each week. Since the terrorist attacks, he said, they have only had one. Although he said he has not had to lay off any of his 20 employees yet, they are instead working 32-hour weeks. He said unless his business gets a jump-start soon, staff cuts would come next.
In the Enterprise Florida survey, about 89% of respondents reported feeling "significant" to "devastating" effects from the post-Sept. 11 slump. Even business owners who are not on the brink, such as Ross Bleustein of Miami-based Atlas Aerospace Accessories, which reports a significant base of European customers - are anxious about what is to come.
"I'm still waiting for the bottom to drop out on me," said Mr. Bleustein, who has not laid off any of his 60 employees and has just resumed allowing workers overtime shifts. "I've got $1 million owed to me right now.... I had one of my biggest customers who used to pay me after 30 days on the button now ask for 90-day terms. What am I going to do? They're a good customer."
In the world of general aviation flight schools, charters and private planes, mostly businesses continue to feel the effects of almost two weeks without revenue due to Federal Aviation Agency restrictions after the attacks. Several business owners in Kendall-Tamiami Airport are considering asking the county for rent relief, said Joel Valle, owner of JV Air Maintenance.
"I've called all the shops around and they're hurting big time," said Mr. Valle, who has reduced his staff about 20 people and is considering pay cuts for employees still working.
"As far as maintenance, people are doing what they really, really need to do, not what they'd like to do. And that's where a lot of the money is."
With thousands of dollars in loan payments left on his newer aircraft, Silver Express flight school owner Thomas Shaffer at Kendall-Tamiami said rent payment is low on his priority list, when compared to the extensive loans he has to repay for his aircraft.
"I don't know anybody in this airport who's able to pay rent," he said. "Right now, it's just a matter of which defaults are going to have the most immediate impact."
Mr. Shaffer said his flight school is doing about 60% of its regular business - considerably more than what it was doing in the two weeks immediately after the attacks. Still, he said, he is unsure about what to expect.
"My concern in terms of my business here is it's just the tip of the iceberg," he said. "It's going to get worse before it gets better. The ripple effects have not yet been felt.
"It takes a couple of months to play out. With each succeeding month, it's going to be more and more painful."