Family Airlines Gets Smacked by the DOT

In news that will surprise absolutely no one, the DOT has sent a letter to Family Airlines saying that it needs to get its act together if it actually wants to fly. Riiight. That’ll happen. You have to read the request and Family’s completely inadequate response for maximum enjoyment. (Here’s a brief refresher on their silly plan for domestic 747s based in Vegas.)

You can read the letter from the DOT to Family Airlines (pdf) yourself, but in short, they aren’t happy. (FAI = Family Airlines, Inc)

Although a substantial amount of time has elapsed since FAI’s initial filing and FAI has submitted certain supplemental information to its application to the Department, FAI has to date failed sufficiently to meet its burden of demonstrating its fitness to allow us to continue processing its application. We remain concerned about FAI’s fitness in every area: managerial competence, finances, and compliance disposition.

The rest of the letter is a scathing rebuke of every single aspect of the airline. It is some fun-filled reading, but not nearly as much fun as the response from the “airline.” You can read that here (.doc).

The response was dated August 4, the same day the letter came from the DOT. Yeah, sure. It had three parts.

  1. This was simply a change of address. (It’s still wrong on the website.)

  2. This was a list of bios for all the new proposed officers without justifying how any of them are qualified. In particular, it didn’t address the DOT’s concern about having Dan Eikleberry as VP of Flight Ops. It also never even touched the concern that DOT had about Barry Michaels continued involvement.

  3. Finally, they addressed the DOT’s concern that they didn’t have enough money to run this operation. This is probably justified since the company’s balance sheet at the time of its previous submission showed $30 in assets. Seriously. The DOT says the airline would need $185 million to begin. The response? They are going to issue 22 million shares of preferred stock to institutional investors at $7.50 each for a total $165 million. Even a non-math whiz could figure out that’s still $20 million below what the DOT says they need. But what’s the chance they can even raise that? The only institutional investor that would be interested in this is one that is institutionalized.

I thought it would be fun to try to get Family Airlines’ take on this letter, so I called the number on the website. I was informed that “due to technical difficulties” my call could not be completed as dialed. Would the technical difficulty be that they don’t actually have any phones? I also sent them an email on Tuesday, August 11 but I haven’t heard back.

Methinks Family should look at an alternative business. If their website is any indication, they may be trying to get in on the healthcare game. Take a look:
Family Airlines

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