Order 201 5

- 4

- 16

Served: April 20, 2015

UNITED STATES OF AMERICA
DEPARTMENT OF TRANSPORTATION
OFFICE OF THE SECRETARY WASHINGTON, D.C.

Issued by the Department of Transportation

on the 20 th day of April , 201 5

Applications of

EASTERN AIR LINES GROUP, INC.

for certificates of public convenience and necessity,

under 49 U.S.C. § 41102 to engage in interstate and foreign charter air transportation of persons, property

, and mail Docket DOT

- OST 2 01 4

- 0012
Docket DOT

- OST

- 201 4

- 0 013

ORDER TO SHOW CAUSE
PROPOSING ISSUANCE OF CERTIFICATE AUTHORITY

Summary

By this order, we tentatively find that Eastern Air Lines Group, Inc.

, (“Eastern”) is a citizen of the United States and is fit, willing, and able to conduct interstate and foreign charter air transportation of persons, property and mail as a U.S. certificated air carrier ; and should be issued certificates of public convenience and necessity authorizing such operations, subject to conditions.

Background

Section 41102 of Title 49 of the Uni ted States Code (“the Transportation Code”) directs us to determine whether companies proposing to engage in interstate and foreign charter air transportation are “fit, willing, and able” to perform such service, and to comply with the Transportation Code and the regulations and requirements of the Department. In making fitness findings, the Department uses a

three

- part test that reconciles the Airline Deregulation Act’s liberal entry policy with Congress’ concern for operational safety and consumer protec tion. In addition to determining that the applicant is a U.S. citizen, t he three areas of inquiry that must be addressed in order to determine a n air carrier’s fitness are whether the applicant: (1) will have the managerial skills and technical ability to conduct the proposed operations, (2) will have sufficient financial resources to commence the operations proposed without posing an undue risk to consumers, and (3) will comply with the Transportation Code and regulations imposed by Federal and S tate agen cies.

On January 28 , 201 4

, Eastern filed applications in Dockets DOT

- OST

- 201 4

- 0 012 and

DOT

- OST

- 201 4

- 0 013 for authority to conduct interstate and foreign charter air transportation of persons, property, and mail pursuant to section 41102 of the Transportation Code. Eastern accompanied

U N I T E D S

T A T E S O F A

M E R I C A D E P A R T M E N T O F T R A N S P O R T A T

I O Nits applications with fitness information required by section 204.3 of our regulations. 1 On June 3, 2014, Mr. Sean Raimbeault filed a comment objecting to Eastern’s applications, alleging that certain of

E astern’s investors had engaged in fraudulent actions. Shortly thereafter, on June 18, 2014, Mr. Raimbeault filed suit against these investors, among others, in the U.S. District Court for the

Southern District of Florida. 2 On November 26, 2014, the civi l lawsuit was dismissed with the consent of all parties. In addition, on January 21, 2015, Eastern submitted a statement signed by Mr. Raimbeault recanting his earlier statement, claiming that his objection had no factual basis.

No other answers were fil ed to the applications and no special issues regarding the applicant have come to our attention. Under these circumstances, we propose to decide the issue of the applicant's fitness on the basis of the written record, and we tentatively conclude that East ern is a U.S. citizen and has met the fitness test to conduct interstate and foreign charter operations. We will, however, give interested parties an opportunity to show cause why we should not adopt as final the tentative findings and

conclusions stated herein

.

FITNESS

The Company

Eastern, a non

- operating entity, was founded in 2011 by Mr. Edward J. Wegel, a U.S. citizen, for the purpose of acquiring the intellectual property of the estate of the former Eastern Air L ines and launching a new air carrier. The applicant is incorporated as a Delaware company with corporate offices in Miami,

Florida. Eastern has issued two classes of stock, preferred and common, both of which have voting rights. The largest shareholders, owning more than 10 percent of the stock, are VV

- DC Eastern Investments, LLC (“VV

- DC”) (61.2 percent) and 1848 Skyworks LLC (“Skyworks”) (16.95 percen t). The remaining shareholders own an aggregate of 21. 83 percent of the shares: PPO Stockholders
(7.8 4 percent), 3 ACPG LLC (“ACPG”) (7.12 percent), Mr. Wegel (3.33 percent), Pitcairn Aviation LLC
(“Pitcairn”) (2.37 percent), and Mr. William Owens (1.14 pe rcent). 4

Managerial Competence

Eastern’s B oard of D irectors consists of the following six individuals, all of whom are U.S. citizens: (1) Mr. Vincent Viol a (Chairman), (2) Mr. Douglas A. Cifu (Vice Chairman), (3) Mr. Joseph DaGrosa,

Jr. , (4) Mr. Edward J. Wegel , (5) Adm iral (Ret. ) William A. Owen s, and (6) Mr. Manuel Diaz.

Mr. Vincent Viola

, the majority shareholder of both Eastern and VV

- DC

, is the Chairman and Owner of the Florida Panthers hockey team (2013

- present) . Mr. Viola is the Founder and CEO of Virtu Financial (2008

- present) and the Founder and Owner of Independent Banking Group (1996

- present).

1 Eastern requested confidential treatment of stockholder agreements and various other capitalization documents as well as copies of the FAA licenses held by certain of its key personnel. By letter dated March 11, 2015, the Department granted the applicant’s request in part and directed that certain material be redacted and filed in the public docket in this proceeding,

which Eastern did on March 12. Eastern filed information supplementing its applications most recently on April 1 5 , 2015

. 2 See Raimbeault v. Accurate Machine and Tool, LLC., No. 14

- CIV

- 20136 (S.D. Fla 2014)

. 3 PPO Stockholders is a group of 22 private investors that collectively hold 7.84 percent of Eastern’s common stock, with

no individual investor hold ing more than 1.56 percent.

4 A more detailed description of Eastern ’s ownership is contained in the CITIZENSHIP section of this order.Mr. Douglas A. Cifu also represents VV

- DC’s interests on the Eastern Board of Directors. He is the

Vice

- Chairman of the Florida Panthers hockey team (2013

- present) and the Co

- Founder and Vice Chairman of Virtu Financial (2008

- 2013), and most recently its President and CEO (2013

- present). Previously, he was an Associate and Partner with the Law Firm of Paul, Weiss, Rifkind, Wharton and Garrison LLP (1 990

- 2008).

Mr. Joseph E. DaGrosa, Jr. represents the interests of Skyworks on Eastern’s Board of Directors and is

the Co

- Founder of 1848 Capital Partners LLC, a private equity firm (2003

- Present). Previously, Mr. DaGrosa was the Founding Partner of Mapl eWood Partners LLC (1996

- 2003) and a Vice President of Special Accounts with Paine Webber Inc. (1986

- 1996).

Mr. Edward J. Wegel, President and CEO of Eastern since its inception, has had a lengthy career in the airline industry. In addition to serving in his current capacity with the applicant, Mr. Wegel is also the Founder and Managing Partner of investment company Aviation Capital Partners Group, LLC (2008

- present) as well as Aviation Capital Partners LLC (1993

- present). He was also the Chief Restruc turing Officer and CEO of One Travel Holdings, Inc. (2004

- 2008); Executive Vice President, Planning and Development of Mesa Air Group, Inc. (2003

- 2005); Chief Operating Officer at Tower Airlines (2000

- 2002); and Senior Vice President with SH&E, an aviation consulting firm (1999

- 2002). Mr. Wegel also served as President and CEO with Chautauqua Airlines/USAirways Express (1997

- 1999); President and Chief Operating Officer with BWIA International Airways (1995

- 1997); Co

- Founder, Board Member,

and Senior Vice P resident

- Finance of Atlantic Coast Airlines (1991

- 1995); and Vice President with Shearson Lehman Brothers (1987

- 1991). Mr. Wegel also served as a Captain in the U.S. Army (1980

- 1985).

Admiral (Ret.) William A. Owens is the Chairman of AEA Investors (Asia) Limited (2009

- present). He previously was the Executive Chairman and CEO of AEA Holdings Asia (2005

- 2009). He also was CEO and Vice Chairman of Nortel Networks Corporation (2004

- 200 5), CEO and Chairman of Teledesic LLC (1998

- 2004), and President, CEO, and Vice Chairman with SAIC (1997

- 1998) and its Vice President for Government (1996

- 1997). Prior to his public sector career, Admiral Owens held several positions with the U.S. Navy, i ncluding Vice Chairman of the Joint Chiefs of Staff (1994

- 1996), Deputy Chief of Naval Operations (1991

- 1993), Commander of the U.S. Sixth Fleet (1990

- 1991), Senior Military Assistant to the Secretary of Defense (1988

- 1991), Director of the Office of Progr am Appraisal for the Secretary of the Navy (1988) and Commander of Submarine Group Six (1987).

Mr. Manuel Diaz is the former mayor of the city of Miami, Florida (2001

- 2009). He is currently the Senior Partner with Lydecker Diaz Law Firm (2010

- present). Mr. Diaz also held the position of Vice President and General Counsel of both Monty’s Restaurant Holdings (1991

- 2001), and Terremark, Inc. (1986

- 1991). He was also a Partner with Berkowitz & Diaz (1980

- 1985).

Eastern ’s key management personnel consis t of the following individuals , all of whom are U.S. citizens :

Mr. Edward J. Wegel Founder, President, and Chief Executive Officer (“CEO”)

M r. James R. Tolzien Chief Financial Officer (“CFO”)

Mr. Terry Lee Pentecost Director of Maintenance

Mr. Jo hn Furneaux Vice President, Flight Operations

Mr. Terry C. Austin Director of SafetyMr. Michael Jefferson Chief Inspector

Mr. Juan P. Nunez Chief Pilot

Mr. James R. Tolzien is Eastern’s CFO, a position he has held since June 2014. Previously he was the Operating Partner and CEO of Sunbelt Diversified Enterprises, LLC (2007

- June 2014). He was the President (2003

- 2007) and CFO (2000

- 2003) of Around the World Travel Inc., Operations and F inance Director with Dancing Bear Investments (1997

- 1999), and Senior Vice President of North American Operations (1996) and Vice President of Finance (1997) with Alamo Rent

- A

- Car. Mr. Tolzien was also employed as a Regional Director for Commonwealth Capi tal Partners (1992

- 1995) and held positions of increasing responsibility with Budget Rent

- A

- Car Corporation including Executive Vice President/CFO, Senior Vice President of Strategic Planning, Vice President/Corporate Controller, and Controller (1976

- 1992)

.

Eastern’s Director of Maintenance, Mr. Terry Lee Pentecost was most recently Eastern’s Director of Quality Control ( June 2014

- April 2015)

. Prior to this

, he served as Director of Quality Control for World Atlantic Airlines (January 2013

- June 2014), an d for Silver Airways (December 2011

- January 2013) . He was also Director of Maintenance and Quality Control for Executive Airlines (September

2008

- December 2011). A licensed Airframe and Powerplant Mechanic, Mr. Pentecost also held several positions of inc reasing responsibility at American Eagle/American Airlines, including Director of Maintenance, Quality Control Manager, Heavy Maintenance Supervisor, CRJ and Saab Program Manager, Maintenance Base Manager, and Reliability Technical Analyst (December 1998

- S eptember 2008) He was a lso employed with Business Express Airlines as a Component Repair Manager (December 1997

- December 1998) and served in the U.S. Air Force (February 1977

- February 1997). Mr. Pentecost is a graduate of Embry

- Riddle Aeronautical University.

Mr. John N. Furneaux, Eastern’s Vice President of Flight Operations since May 2014, was most recently the Chief Pilot in USAirways’ Test P ilot division (2006

- 2014). A licensed Airline Transport Pilot, he was also a Pilot and Check Airman with USAirways (1983

- 2014), a Pilot with Air Florida (1980

- 1983), and a Pilot and Instructor in the U.S. Air Force (1971

- 1980).

Mr. Terry C. Austin, East ern’s Director of Safety, is a licensed Airline Transport Pilot with over 11,000 flight hours. He was most recently employed with the FAA as an Aviation Safety Inspector (March

2009

- January 2014) and a Principal Operations Inspector (July 2007

- March 2009) . Mr. Austin was the Director of Safety and Security with Centurion Air Cargo (March 2005

- July 2007), a Flight Officer with Independence Airlines (August 2001

- February 2005), President of Savanna Group Consulting (May

2001

- August 2002), Director of Safety with Pro Air (December 1999

- May 2001), First Officer with Kitty Hawk International (1999), and Director of Flight Safety with American International Airways, Inc., (July 1997

- January 1999). Mr. Austin also interspersed several stints working as a FAA Pri ncipal Operations Inspector (July 1994

- July 1997, August 1989

- February 1991, August 1984

- March 1988) with assignments as a Standardization Auditor, Instructor Pilot and Instrument Flight Examiner for the U.S. Army (February 1991

- July 1994, March 1988

- Augus t 1989, March 1981

- August 1984).

Mr. Michael Jefferson is Eastern’s Director of Quality Control, a position he has held since April 2015. A licensed Airframe and Powerplant Mechanic, Mr. Jefferson previously was a Consultant for

Airworthiness Internat ional, Inc. (August 2014

- April 2015; January 2007

- January 2014; January

December 2004); Vice President of Technical Operations for Dynamic Airways, LLC (January 2014

-August 2014); and Vice President/Director of Maintenance for MaxJet Airways, Inc. (Decembe r 2004

- January 2007). Additionally, he was Vice President of Maintenance (November 2002

- January 2004) and Director of Quality Assurance (October 2000

- November 2002) for Midway Airlines; an Assistant Principal Maintenance Inspector for the FAA (September 1 997

- October 2000); a Maintenance Manager for International Air Leases, Inc. (January 1992

- September 1997); and a Maintenance Supervisor for Eastern Air Lines Inc. (February 1986

- January 1992). Mr. Jefferson also served in the U.S. Marine Corps (February 1 983

- February 1986).

Mr. Juan P. Nunez, a licensed Airline Transport Pilot, joined Eastern as a 737 Pilot in January 2015 and was promoted to Chief Pilot in April 2015. He previously held positions as a Simulator and Ground School Instructor for Boeing Fl ight Training Services (May 2012

- January 201 5), Amerijet International Inc. (April 2012

- January 2015) , Flight Training International (January 2014

- January 2015), and Pan Am Flight Academy (May 2007

- August 2013). Mr. Nunez was also a Captain with Miami Air International (May 1997

- May 2012).

In view of the experience and background of the applicant's key personnel, we tent atively conclude that

Eastern has demonstrated that it possesses the managerial skills and technical ability to conduct its
proposed ch arter operations. 5

Operating Proposal and Financial Condition

If granted the interstate and foreign charter authority it seeks , Eastern intends to operate charter flights from its hub in Miami to points in Latin America, Cuba, and the Caribbean using AC MI contracts that will rely on the charterer to pay for, among other things, fuel, landing fees, and ground handling expenses, while Eastern will incur the costs of aircraft, crew, maintenance, and insurance . The air carrier plans to initially operate two B737

- 800s and one B737

- 700 configured for 134

- 162 passengers and envisions a transition to scheduled service and further fleet growth, having recently announced an order from Boeing for 10 B737

- 800 aircraft with deliveries planned for 2017.

In establ ishing financial fitness, the Department typically asks an applicant to demonstrate that it has access to financial resources sufficient to cover its pre

- operating expenses and any negative working

c apital balance, plus a working capital reserve equal to t he operating costs that are reasonably projected to be incurred during three months of “normal” operations. Because projected expenses during the first several months of air service frequently do not include all costs that will be incurred during a “norma l” period of operations, it is our practice to base our three

- month test on one

- quarter of the first year’s operating costs. Further, in calculating available resources, projected revenues may not be used.

Eastern provided the Department with a balance sheet dated February 28 , 2015

, which shows the company as having current assets of $ 3.15 million and current liabilities of $ 1.48 million, giving the

company a positive working capital balance of $ 1.67 million

. Eastern also provided the Department

with it s pre

- operating and first

- year expense forecasts. The applicant expects to incur about $4.9 0 million in pre

- operating expenses

, which includes conformity of maintenance manuals, proving runs,

5 Before authorizing an air carrier to conduct air transportation operations, the FAA also evaluates certain of the air carrier's key personnel with respect to the minimum qualifications for those positions as prescribed in the Federal Aviation Regulations. The FAA’s evaluation of these key personnel provides an added practical and in

- person test of their skills and technical ability. All of Eastern’s key technical personnel have been ap proved by the FAA to hold their positions.crew training, and FAA/DOT certification costs . Eastern states it has already expensed approximately $4.11 million of this amount as of February 2015, leaving $797,781 million in pre

- operating expenses yet to be paid. Eastern expects to incur first

- year expenses of approximately $20.31 million.

We have reviewed Eastern’s forecasts and find them to be reasonable. Thus, in order to meet our financial fitness criteria, Eastern will need access to approximately $5.87 million. 6

In support of its ability to meet our financial fitness test, Eastern provided information related to the financial resources available to it. The applicant raised $2.5 million from PPO Stockholders through a private placement offering (“PPO”) of Eastern common stock. Eastern also raised $5.0 million from

VV

- DC in exchange for East ern’s preferred stock. Eastern also provided a letter from majority

shareholder and VV

- DC manager Mr. Vincent Viola, pledging a 2

- year senior secured $5.0 million line

of credit from VV

- DC to support Eastern’s proposed operations together with a statement from Goldman, Sachs & Co., dated July 7, 2014, showing the balance of Mr. Viola’s personal bank accounts to be in excess of $5 .0 million. Eastern also provided a letter from City National Bank which stated th e company had in its accounts, as of March 26, 2015, funds in excess of $2.0 million.

In light of the above, w e tentatively conclude that Eastern will have sufficient financial resources available to it to enable it to commence its proposed charter operat ions without posing an undue risk to

consumers or their funds. We note that, as is our practice, prior to making any authority awarded to Eastern effective, we will require the company to demonstrate that it continues to have access to the

financial resou rces needed to meet our financial test.

Compliance Disposition

O ther than the lawsuit brought by Mr. Raimbeault

, which ultimately was dismissed

, Eastern states that there have been no charges of fraud, felony or antitrust violations, or of unfair, antic ompetitive or deceptive business practices filed against it, its owners, or its key personnel in the past 10 years.

Moreover , we note that Mr. Raimbeault subsequently recanted on the record in this proceeding the allegations of fraud he made in his June 3 , 2014, objection to Eastern’s applications. Further, the

a ppli ca nt states th a t n e ith e r it n o r a n y of its k e y p er son n e l h a ve b ee n involv e d in a n a c c id e nt or in c id e nt i n the y e a r p r e c e ding its a ppli ca tion or a t a n y t i me in the p a st whi c h re m a ins und e r inv e sti g a tion b y the F AA, the N a tion a l T ra nspo r t a tion S afe t y B o ar d, or the c omp a n y its e l f

.

The FAA advises us that it has no objections to the Department’s grant of Eastern ’s request for charter authority and knows of no reason why the air carrier should not be granted the authority it is seeking. A review of our records and other information available to us has uncovered no derogatory information regarding Eastern, its owners, or its key personnel.

In light of these circumstances, we tentat ively find that Eastern has the proper regard for the laws and regulations governing its services to ensure that its aircraft and personnel conform to applicable safety standards and that acceptable consumer relations practices will be followed

.

6 The $5.87 million noted here is one quarter of the applicant’s forecast of approximately $ 20.31 million in first year expenses plus $ 797,781 remaining to be paid in pre

- operating costs.CITIZENSHIP

49 U.S.C. § 41102 requires that authority to engage in air transportation be held only by citizens of the

United States as defined in 49 U.S.C. § 40102(a)(15). That section requires that the president and

two

- t hirds of the Board of Directors and other managi ng officers be U.S. citizens, that at leas t 75 percent of the voting interest be owned by U.S. citizens, and that the air carrier must be under the actual control

of U.S. citizens.

As previously stated, Eastern is a Delaware corporation owned in the percentages indicated, by the following, most of which are U.S. citizens: (1) VV

- DC (61.2 percent), (2) Skyworks (16.95 percent), (3) PPO Stockholders (7.8 4 percent), (4) ACPG (7.12 percent), (5) Mr. Wegel (3. 33 percent), (6) Pitcairn (2.37 percent), and (7) Mr. Owens (1.14 percent). The applicant has issued two classes of stock, preferred and common, both of which have voting rights.

The applicant’s majority owner, VV

- DC, a Delaware limited liability company, holds Eastern’s Series A preferred stock and has the right to appoint two members to the applicant’s Board of Directors. VV

- DC is owned by Mr. Vincent Viola (85.07 percent), Mr. Douglas A. Cifu (9.45 percent), and Mr. Matthew Caldwell (5.0 percent), and one other individual (0.5 percent), all of whom are U.S. citizens. Mr.

Caldwell serves as VV

- DC’s manager and owns Eastern’s Series B preferred stock. 7

Skyworks, a Delaware lim ited liability company

, owns 16.95 percent of Eastern’s common stock. Skyworks is majority

- owned by 1848 Aviation Partners LLC (“Aviation Partners) (86.5 percent), a Florida limited liability company, which is

, in turn, owned by Messrs. Joseph DaGrosa, Jr ., and David Neithardt, and three other individuals, all of whom are U.S. citizens. The remaining 13.5 percent of Skyworks is owned by 1848 Blueco LLC (“Blueco”), a Florida limited liability company owned by

33 individual investors and/or investment ent ities, none owning ultimately more than 0.5 percent of

Eastern’s common stock. Skyworks is managed by a Miami

- based private equity firm, 1848 Capital Partners LLC (“1848 Capital Partners”), a Florida limited liability company founded by Messrs.

DaGrosa

, N eithardt, and John Sicilian , all of whom are U.S. citizens

. 8 Eastern states that 21 percent of Blueco is owned by PIMCO Investment, Inc., a fund managed by a subsidiary of Allianz SE of Germany. Eastern did not provide information regarding the citizensh ip of investors owning less than 10 percent of Blueco. While Blueco’s manager is a U.S. citizen, absent further information regarding the citizenship of its investors, Blueco cannot be considered a U.S. citizen by Statute. However, since Blueco only hold s 13.5 percent of the equity in Skyworks with the remaining equity held by U.S. citizens, we find Skyworks to be a U.S. citizen.

PPO Stockholders is a group of 22 private investors (18 individuals and 4 entities) that contributed, through a private place ment offering, $2.5 million in exchange for shares of Eastern’s common stock.

PPO Stockholders hold shares directly in Eastern and collectively hold 7.8 4 percent of Eastern’s

common stock with no individual investor holding more than 1.56 percent. In addition, of the total percentage of shares held by PPO Stockholders, only 2.3 percent are held by non

- U.S. citizens.

7 Eastern states that Series B stock is an internal designation solely for VV

- DC profit

- sharing purposes.

8 Eastern states that t he third 1848 Capital Partners founder, Mr. John Sicilian, has no economic or voting interest in

Eastern.ACPG and Pitcairn, both Delaware limited liability companies, are affi liated with 1848 Capital Partners, the equity firm that manages Skyworks, and are part of Eastern’s original founding investor group.

ACPG is managed by Mr. Wegel and its ownership of 7.12 percent of Eastern common stock is held by

two individuals and one investment entity, all U.S. citizens

. Pitcairn holds 2.37 percent of Eastern

common stock and is owned by two individuals, both U.S. citizens

. 9

Eastern further notes that it intends to provide employee stock options to its key personnel , all of whom

a re U.S. citizens. The company also intends to i ssue warrants equal to three percent of Eastern common stock to the estate of the legacy Eastern Air Lines

, and warrants equal to one percent of Eastern common

stock each to financiers Credit Agricole and Ray mond James & Associates

, which may further dilute the

amount of common stock.

Addit i on a l l y , Eastern’s p r e sident, bo a rd of dir ec to r s, a nd other k e y p e rson n e l a re identified as U.S.

c i t i z e ns and the company has provided an affidavit attesting that it is a U.S. citizen within the meaning of the Statute and that it actually is controlled by U.S. citizens. The company provided an amendment to its Certificate of Incorporation which provides for a separate stock record for the registration of stock that is beneficially owned by non

- U.S. citizens and at no time will ownership of Eastern share’s representing more than the maximum percentage allowable by law will be registered

.

Our review of the applicant’s citizen ship has uncovered no reason to suggest that control of Eastern rests

with non

- U.S. cit i zens , thus, b ased on the above information

, we tentatively conclude that Eastern is a citizen of the United States and is fit, willing, and able to provide the intersta te and foreign charter service it proposes as a U.S. certificated air carrier.

PUBLIC CONVENIENCE AND NECESSITY

No finding of consistency with the public convenience and necessity is required for the award of authority for interstate charter air transpor tation under section 41102, although such a finding is required for authority to engage in foreign charter air transportation.

We tentatively find that the foreign charter air transportation proposed by Eastern is consistent with the public convenience an d necessity. By Order 78

- 7

- 106, which instituted the Former Large Irregular Air Service Investigation , the Civil Aeronautics Board found that there was a continuing demand and need for additional charter air carriers. Therefore, if the Department finaliz es the tentative conclusions of this order, Eastern will receive certificates authorizing it to engage in interstate and foreign charter air transportation of persons, property

, and mail under section 41102. 10

OBJECTIONS

On February 26, 2015, Eastern filed a motion requesting that, upon the issuance of a show

- cause order tentatively finding Eastern fit, willing, and able to engage in interstate and foreign charter air transportation as a U.S. certificated air carrier, the Department reduce its standard 14

- day objection and

7

- day answer period to 5 days for objections and 3 days for answers

.

9 Eastern request ed confidential treatment of persons or entities holding less than 10 percent ownership of Eastern stock. The company provided sufficient information to verify the U.S. citizenship of Pitcairn and ACPG.

10 Pursuant to 49 U.S.C. § 41307, issuance of forei gn certificate authority to Eastern is subject to Presidential review.On March 4, 2015 Eastern advised the Department that it had polled interested parties and there were no objections to shortening the answer period. Under these circumstances

, we have decided to grant Eastern’s request for a shortened answer period in this case. Therefore, we will give interested persons 5 business days following the service date of this order to show cause why the tentative findings and

conclusi ons set forth here should not be made final; answers to objections will be due within 3 business days. We expect that persons objecting to our tentative findings and conclusions will support their objections with relevant and material facts. 11 We will not entertain general, vague, or unsupported objections. If no substantive objections are filed, we will issue orders that will make final our tentative findings and conclusions with respect to certification and fitness and will issue Eastern certificates th at will contain an exact copy of the attached Terms, Conditions and Limitations

.

CERTIFICATE CONDITIONS AND LIMITATIONS

If Eastern is found fit and issued the certificates it seeks, its authority will not become effective until the

air carrier has fulfil led all of the requirements for effectiveness as set forth in the terms, conditions and

limitations attached to its certificates. T his includes , a mong other things, (1) a copy of the holder's Air Carrier Certificate and Operations Specifications authorizing charter operations from the FAA, (2) a fully

- executed OST Form 6410 evidencing liability insurance for all of its aircraft that meets the requirements of 14 CFR §205.5( b) of our rules, (3) verification of available funding necessary to meet the Department’s fitness requirements, and (4) a statement of changes that Eastern has undergone in its ownership, management, operations, finance, or compliance disposition since the issuance of this order.

Additionally, o ur tentative findings stated above are based on the operating plan described in Eastern ’ s applications that utilizes up to three aircraft in charter operations . These findings might no longer apply if the company were to substantially change the scope of its operations through the introduction of additional aircraft. Therefore, once the applicant’s certificates become effective, should Eastern propose

to operate additional aircraft

, it must notify the Department i n writing at least 45 days in advance and demonstrate its fitness for such operations prior to implementing service with those additional aircraft.

Furthermore, we remind Eastern of the requirements of 49 U.S.C. § 41110(e). Specifically, that section

r equires that, once a n air carrier is found fit initially, it must remain fit in order to hold its authority. To be assured that certificated air carriers continue to be fit after effective authority has been issued to them, we require that they supply inf ormation describing any subsequent substantial changes they may undergo in areas affecting fitness

. 12 The compliance of the company with this requirement is essent ial if

we are to carry out our responsibilities under 49 U.S.C. § 41110(e). 13

11 If an oral evidentiary hearing or discovery procedures are requested, the objector should state in detail why such hearing or discovery is considered necessary, and what material iss ues of decisional fact the objector would expect to establish through a hearing or discovery that cannot be established in written pleadings. The objector should consider whether discovery procedures alone would be sufficient to resolve material issues of decisional fact. If so, the type of procedure should be specified ( see Part 302, Rules 19 and 20); if not, the reasons why not should be explained.

12 Eastern may contact our Air Carrier Fitness Division to report proposed substantial changes in its ope rations, ownership, or management, and to determine what additional information, if any, will be required under section 204.5. Moreover, by notice dated July 21, 1998, the Department requested air carriers to provide a 30

- day advance notification of any p roposed change in ownership, restructuring, or recapitalization. If the air carrier fails to file the information or if the information fails

to demonstrate that the air carrier will continue to be fit upon implementation of the substantial change, the De partment mayFinally, to aid the Department in monitoring the fitness of new air carriers, we require that all newly certificated air carriers submit a detailed progress report, within 45 days following the end of the first year of certificated operations, to the Air Carrier Fitness Division. The report should include a description of the air carrier’s current operations (number and type of aircraft, principal markets served,

total number of full

- time and part

- time employees), a summary of how these operations have changed during the year, a discussion of any changes it anticipates from its current operations during its second
year, current financial statements, 14 and a listing of current senior management and key technical personnel. The air carrier should also be prepared to meet wi th staff members of the Fitness Division to discuss its current and future operations.

ACCORDINGLY:

1. We direct all interested persons to show cause why we should not issue orders making final the tentative findings and conclusions stated above and award certificates to Eastern Air Lines Group, Inc., authorizing it to engage in interstate and foreign charter air transportation of persons, property, and mail, subject to the attached specimen Terms, Conditions, and Limitations.

2. We grant the request of Eastern Air Lines Group, Inc., in Dockets DOT

- OST

- 2014

- 0012 and DOT

OST

- 2014

- 0013 to shorten the time to file objections to 5 business days and for answers to any objections to 3 business days thereafter.

3. We direct any interested persons having ob jections to the issuance of orders making final any of the proposed findings, conclusions, or the certificate awards set forth here to file such objections with the Department of Transportation Dockets, 1200 New Jersey Avenue, SE., West Building Ground Flo or, Room W12

- 140, Washington, D.C. 20590, in Dockets DOT

- OST

- 2014

- 0012 and

DOT

- OST

- 2014

- 0013, and serve them upon all persons listed in Attachment A no later than 5 business days after the service date of this order; answers to objections shall be filed n o later than 3 business days

thereafter.

4. If timely and properly supported objections are filed, we will accord full consideration to the matters
or issues raised by the objections before we take further action. 15

take such action as is appropriate, including enforcement action or steps to modify, suspend, or revoke the air carrier's charter authority.

13 We also remind Eastern of the requirements of section 204.7 of our rules. This section provides, among other things, that (1) the certificate authority granted to a company shall be revoked if the company does not commence actual flying operations under that authority within one year of the date of the Department's determination of its fitness; (2) if the company commences operations for which it was found fit and subsequently ceases such operations, it may not resume certificated operations unless its fitness has been redetermine d; and (3) if the company does not resume operations within one year of its cessation, its authority shall be revoked for dormancy.

14 These financial statements should include a balance sheet as of the end of the company’s first full year of actual flight operations and a twelve

- month income statement ending that same date.

15 Since we have provided for the filing of objections to this order, we will not entertain petitions for reconsideration.5. In the event that no objections are filed, we will consider all further procedural steps to be waived and we will enter an order making final our tentative findings and conclusions.

6. We will serve a copy of this order on the persons listed in Attachmen t A.

7. We will publish a summary of this order in the Federal Register.

By :

SUSAN L. KURLAND Assistant Secretary for Aviation
and International Affairs

An electronic version of this document is available at http://www.regulations.gov

### Attachment Specimen 

### Terms, Conditions, and Limitations

EASTERN AIR LINES GROUP, INC.

is authorized to engage in interstate charter air transportation of persons, property

, and mail between any point in any State, territory, or possession of the United States or the District of Columbia, and any other point in any of those entities.

This aut hority is subject to the following provisions:

(1) The authority to operate under this certificate will not become effective until six (business) days after the Department has received the following documents; provided

, however , that the Department may st ay the effectiveness of this authority at any time prior to

that date:

(a) A copy of the holder's Air Carrier Certificate and Operations Specifications authorizing such operations from the Federal Aviation Administration (FAA).

(b) A certificate of insur ance on OST Form 6410 evidencing liability insurance coverage meeting the requirements of 14 CFR 205.5(b) for all of its aircraft.

(c) A statement of any changes the holder has undergone in its ownership, key personnel, operating plans, financial posture, or compliance history, since the date of

the Show Cause Order in this case.

(d) A revised list of pre

- operating expenses already paid and those remaining to be paid, as well as independent verification that the holder has available to it funds sufficient to cover any remaining pre

- operating expenses and to provide a working capital reserve equal to the operating costs that would be incurred in three months of operations.

(2) Pending receipt of effective authority, the holder may not accept payment of any kind (i.e., cash, check, or credit card), or enter into contracts for the operations proposed under this certificate, and any advertisement by the holder must prominently state: "This service is subject to receipt of government operating authority."

(3) The holder shall at all times conduct its operations in accordance with the regulations prescribed by the Department of Transportation for the services authorized by this certificate, and with such other reasonable terms, conditions, and limitations as th e Department of Transportation may prescribe in the public interest.

(4) The holder's authority under this certificate is effective only to the extent that such operations are also authorized by the Federal Aviation Administration (FAA), and comply2

with all U.S. Government requirements concerning security, including, but not limited to 49

CFR Part 1544. ∗

( 5 ) The holder shall at all times remain a "Citizen of the United States" as required by 49 U.S.C. 40102(a)(15).

( 6 ) The holder shall maintain in effect liability insurance coverage as required under 14 CFR Part 205. Failure to maintain such insurance coverage will render a certificate ineffective, and this or other failure to comply with the provisions of Subtitle VII of Title 49 of the United States Code or the Department's regulations shall be sufficient grounds to revoke this certificate.

( 7

) The holder is not authorized to engage in air transportation operations between points within the State of Alaska.

( 8 ) Shoul d the holder propose any substantial change in its ownership, management, or operations (as defined in 14 CFR 204.2(l)), it must first comply with the requirements of 14

CFR 204.5.

( 9 ) In the event that the holder does not commence actual flying operation s under this certificate within one year of the date of the Department's determination of its fitness, its authority shall be revoked for dormancy, unless the holder is conducting operations under another type of certificate authority. Further, in the eve nt that the holder commences operations for which it was found "fit, willing, and able" and subsequently ceases all such operations, its authority under all certificates held shall be suspended under the terms of 14 CFR 204.7 and the holder may neither rec ommence nor advertise such operations unless its fitness to do so has been redetermined by the Department. Moreover, if the holder does not resume operations within one year of its cessation, its authority shall be revoked for dormancy.

∗ To assure compliance with all applicable U.S. Government req uirements concerning security, the holder shall, before commencing any new service (including charter flights) to or from a foreign airport, contact its Principal Security Inspector (PSI) to advise the PSI of its plans and to find out whether the Transport ation Security Administration has determined that security is adequate to allow such airport(s) to be served.

### Attachment Specimen 

### Terms, Conditions, and Limitations

EASTERN AIR LINES GROUP, INC.

is authorized to engage in foreign charter air transportation of persons, property and mail:

Between any place in the United States and any place outside thereof.

This authority is subject to the following provisions:

(1) The authority to operate under this certificate will not become effective until six (business) days after the Department has received the following documents; provi ded

, however , that the Department may stay the effectiveness of this authority at any time prior to

that date:

(a) A copy of the holder's Air Carrier Certificate and Operations Specifications authorizing such operations from the Federal Aviation Administration (FAA).

(b) A certificate of insurance on OST Form 6410 evidencing liability insurance coverage meeting the requirements of 14 CFR 205.5(b) for all of its aircraft.

(c) A statement of any changes the holder has undergone in its ownership, k ey personnel, operating plans, financial posture, or compliance history, since the date of

the Show Cause Order in this case.

(d) A revised list of pre

- operating expenses already paid and those remaining to be paid, as well as independent verification tha t the holder has available to it funds sufficient to cover any remaining pre

- operating expenses and to provide a working capital reserve equal to the operating costs that would be incurred in three months of operations.

(2) Pending receipt of effective au thority, the holder may not accept payment of any kind (i.e., cash, check, or credit card), or enter into contracts for the operations proposed under this certificate, and any advertisement by the holder must prominently state: "This service is subject to receipt of government operating authority."

(3) The holder shall at all times conduct its operations in accordance with the regulations prescribed by the Department of Transportation for the services authorized by this certificate,

and with such other re asonable terms, conditions, and limitations as the Department of Transportation may prescribe in the public interest.

(4) The holder shall at all times conduct its operations in accordance with all treaties and agreements between the United States and oth er countries, and the exercise of the privileges granted by this certificate is subject to compliance with such treaties and agreements and2

with any orders of the Department of Transportation issued under them or for the purpose of requiring compliance wit h them.

( 5 ) The exercise of the authority granted here is subject to the holder's first obtaining from the appropriate foreign governments such operating rights as may be necessary.

( 6 ) The holder's authority is effective only to the extent that such operations are also authorized by the FAA, and comply with all Department of Transportation and Department of Homeland Security requirements concerning security , including, but not limited to 49 CFR

Part 1544. ∗

( 7

) The holder shall at all times remain a "Citizen of the United States" as required by 49 U.S.C. 40102(a)(15).

( 8 ) The holder shall maintain in effect liability insurance coverage as required under 14

CFR Part 205. Failure to maint ain such insurance coverage will render a certificate ineffective, and this or other failure to comply with the provisions of Subtitle VII of Title 49 of the United States Code or the Department's regulations shall be sufficient grounds to revoke

this cert ificate.

( 9 ) Should the holder propose any substantial changes in its ownership, management, or operations (as that term is defined in 14 CFR 204.2(l)), it must first comply with the requirements of 14 CFR 204.5.

(1 0 ) In the event that the holder does not commence actual flying operations under this certificate within one year of the date of the Department's determination of its fitness, its authority shall be revoked for dormancy, unless the holder is conducting operat ions under another type of certificate authority. Further, in the event that the holder commences operations for which it was found "fit, willing, and able" and subsequently ceases all such operations, its authority under all certificates held shall be su spended under the terms of 14 CFR 204.7 and the holder may neither recommence nor advertise such operations unless its fitness to do so has been redetermined by the Department. Moreover, if the holder does not resume operations within one year of its cess ation, its authority shall be revoked for dormancy.

∗ To assure compliance with all applicable U.S. Government requirements concerning security, the holder shall, before commencing any new service ( including charter flights) to or from a foreign airport, contact its Principal Security Inspector (PSI) to advise the PSI of its plans and to find out whether the Transportation Security Administration has determined that security is adequate to allow

such airport(s) to be served.3

ATTACHMENT A

SERVICE LIST FOR

EASTERN AIR LINES GROUP, INC.

MR ED WEGEL

CEO

EASTERN AIRLINES

MIAMI INTL AIRPORT

MIAMI FL 3 3142

MR JOHN MIETUS

LAW OFFICE OF JOHN MIETUS LLC

6701 DEMOCRACY BLVD

BETHESDA MD 20817

- 7500

MR BRIAN KARNS

CERTIFICATION PROJECT MANAGER

FEDERAL AVIATION ADMINISTRATION

MIRAMAR FL 33027

MR PETER LYNCH AGC

- 300

ASST CHIEF COUNSEL FOR

ENFORCEMENT

FEDERAL AVIATION ADMINISTRATION

800 INDEPENDENCE AVE SW

WASHI NGTON DC 20591

MR MICHAEL HAMBRICK

MR STEPHEN LEGERE

MR DAVID SAUCIER

FEDERAL AVIATION ADMINISTRATION

MIRAMAR FL 33027 MR WILLIAM CHADWICK

OFFICE OF AIRLINE INFO

DEPT OF TRANSPORTATION

1200 NEW JERSEY AVE SE

WASHINGTON DC 20590

MR MARK MAZOR AFS

- 900

MANAGER CSET

FAA SUITE 203B

45005 AVIATION DRIVE

DULLES VA 20166

- 7537

KATHERINE TATUM

TECHNICAL PROGRAMS BRANCH

AFS 260

FEDERAL AVIATION ADMINISTRATION

800 INDEPENDENCE AVE SW

WASHINGTON DC 20591