Monday, May 8, 2006
CommutAir Gains Financing, Expands Service
In a step toward reaching its growth plans for the next two years, Plattsburgh, N.Y.-based CommutAir raised $37 million in secured equipment financing. The company also announced plans to add 10 cities to its Continental Express service at Cleveland Hopkins International Airport (CLE), beginning later this year. Chairman and CEO John Sullivan said that current economics were forcing the increase in flight lengths. "With fuel costs up 400 percent since 2001, the airlines operating larger aircraft have been forced away from the shorter routes," he said. "That is the key to our future growth, since we are being asked to fly additional short routes under more favorable contracts."
Expansion plans for the airline include bidding on other fee-for-service contracts to serve other major-carrier partners, similar to the SkyWest, Trans States and Republic Holdings models. Vice President-Marketing Joel Raymond said CommutAir is currently in discussions with potential partners and exact plans have not been disclosed.
While the 10 cities that are a part of its impending expansion have not been named, CommutAir's plans call for a major fleet expansion of 16 aircraft. The new aircraft will be dedicated to the new Cleveland service, which is expected to begin later this year.
Raymond indicated the 37-seat Bombardier Q200 and the 34-seat Saab 340 are the choices with an announcement expected in the next couple of weeks. It currently operates Beech 1900Ds. Raymond said the acquisition of the new aircraft will be through traditional structured financing and leasing commensurate with the terms of the Continental Express contract.
The funding, from the Laurus Master Fund, a New York-based institutional investment fund that specializes in providing financing to small and micro-capitalization companies, has been used to redeem aircraft mortgages previously held by NBT Bank and Raytheon Aircraft Credit Corp. With the addition of the 10 new routes to the 11 already serving the CLE hub, CommutAir's routes will increase to 32 cities in 11 states in the Northeast and Upper Midwest.