Trump Shuttle

Last updated
Trump Shuttle
Trump Shuttle logo, August 1989.svg
IATA ICAO Call sign
TBTPSTRUMP
FoundedJune 7, 1989 (1989-06-07)
Ceased operationsApril 7, 1992 (1992-04-07)
(rebranded as USAir Shuttle)
Destinations
Parent company The Trump Organization (1989–1992)
Key people
A Trump Shuttle Boeing 727-100 in 1989 Boeing 727-25, Trump Shuttle AN1132781.jpg
A Trump Shuttle Boeing 727-100 in 1989

Trump Shuttle, Inc. was an airline owned by Donald Trump from 1989 to 1992. The landing rights and some of the physical assets necessary to operate the shuttle flights were originally part of Eastern Air Lines and known as the Eastern Air Lines Shuttle. It operated hourly flights on Boeing 727 aircraft from LaGuardia Airport in New York City to Boston Logan International Airport in Boston, Massachusetts and Ronald Reagan Washington National Airport in Washington, D.C., as well as charter service to other destinations. Its IATA designator code was TB (later reassigned to Jetairfly, which became TUI fly Belgium). [1]

Contents

Trump's formal launch in the air business occurred in March 1988 when he acquired three Sikorsky S-61 helicopters that belonged to Resorts International Airlines (RIA) used to shuttle high rollers to the Resorts Casino Hotel in Atlantic City, New Jersey. [2] The three green and orange helicopters were repainted black and red and emblazoned with the Trump Air logo. [3]

History

Formation

In the late 1980s, both Eastern Air Lines and Pan American World Airways operated air shuttle services in the Northeastern United States, which were highly profitable even though the two airlines, as a whole, were not. [4] As the financial outlook for Eastern became more pessimistic in the late 1980s, the carrier began to sell its routes and aircraft. It organized its profitable shuttle operation into a separate company, headed by Bruce Nobles, with the intent of selling it to raise cash.

Eastern chairman Frank Lorenzo met Donald Trump at a party, and subsequently negotiated the sale of the shuttle to Trump for $365 million, more than the projected cost to start up a similar airline, but justifiable if the airline achieved a high market share. [5] For that price, Trump got a fleet of 17 Boeing 727s, landing facilities in each of the three cities that the shuttle flew to, and the right to put his name on the company and its airplanes. [6] The shuttle had previously been a "no-frills" operation for business travelers, but Trump announced that he would convert it to a luxury airline. [7]

After reaching an agreement with Trump in October 1988, Eastern filed for Chapter 11 bankruptcy protection. Many passengers switched to the competing Pan Am Shuttle, and the previously profitable Eastern Shuttle began losing money. Trump attempted to use the situation to negotiate a lower price and to acquire additional aircraft from Eastern. America West Airlines submitted a more attractive competing offer on May 10, but failed as its financing was not in place. Trump's offer was approved by the bankruptcy court in May 1989. [7] In June 1989 the deal was completed, financed through a loan from a syndicate of banks led by Citibank. [8]

The new Trump Shuttle operation launched on June 8, 1989, and by the end of August had returned to a strong market share of 40-50%. Trump pushed to make the new shuttle a luxury service and a marketing vehicle for the Trump name. Its aircraft were newly painted in white livery and the interiors redecorated with such features as maple wood veneer, chrome seat belt latches, and gold colored lavatory fixtures. The airline also was a leader in the adoption of advanced technologies: It introduced some of the first passenger self-service check-in kiosks, in coordination with Kinetics, at its LaGuardia base; and partnered with LapStop, a startup firm that rented laptop computers to passengers. The airline was also an early adopter of the GTE Airfone in-flight telephone system. [5] [7] Flights offered free meals, including chicken and steak on some flights, as well as complimentary champagne, beer and wine. [9] Both Trump and Pan Am spent millions on advertising campaigns around this time in an attempt to maintain strong competitive positions. [4]

August 1989 incident

In August 1989, a Trump Shuttle flight arriving in Boston incurred a nose gear failure upon landing due to maintenance errors by Eastern personnel prior to the acquisition. [5] Trump personally flew on the next Trump Shuttle flight to Boston in order to manage the public reaction to the incident. [5]

Financial difficulties

Trump Shuttle Financial Results
(USD 000)1990 [10] 1991 [11]
Operating revenue172,013169,096
Operating loss(40,122)(24,671)
Net loss(68,761)(58,552)
Operating margin-23.3%-14.6%
Net margin-40.0%-34.6%

The company was never profitable. [6] Passenger traffic on the shuttle began to decline in November 1989. In late 1989, the Northeastern United States entered an economic recession which depressed demand, while the August 1990 Iraqi invasion of Kuwait caused jet fuel prices to double. [5] While costs of running the airline rose, many of the corporate customers using the shuttle were cutting travel budgets. Trump's casino business was simultaneously encountering serious difficulties, and Trump was forced to cede control over several business holdings to his bankers in June 1990 in order to avoid personal bankruptcy. The airline ran out of cash and defaulted on its debt in September 1990. [7]

Trump Shuttle conducted some charter operations around this time to monetize the shuttle's spare aircraft. In June 1990, the airline carried Nelson Mandela on his eight-city tour of the United States. [12] During the Gulf War of 1990–91, the airline received a government contract to ferry U.S. military personnel between the key domestic bases of Dover AFB, Charleston AFB, Travis AFB, McChord AFB, and Kelly AFB.

Sale

Trump had personally guaranteed $135 million of the shuttle's debt. Following the default, Citibank made arrangements for Northwest Airlines to take control of the shuttle in exchange for relieving Trump's personal liability on its debt, and all sides were reportedly close to an agreement by April 1991. [8] Delta Air Lines agreed to buy the competing Pan Am Shuttle in July, and Northwest announced that its acquisition of the Trump Shuttle was cancelled in August, reportedly due to the Trump Shuttle's unions demanding parity with Northwest employees and Trump refusing to discount the price to reflect this. [7] USAir ultimately reached an agreement in December 1991 to take operational control of Trump Shuttle for up to ten years, with an option to buy it after five years. [13] Bankers involved in the negotiations said that Trump would be relieved of at least $100 million of his guarantee, and possibly as much as $110 million, leaving him owing between $25 and $35 million in the closing out of his ownership of the company. [13]

On April 7, 1992, Trump Shuttle ceased to exist when it was merged into a new corporation, Shuttle, Inc., which began operating as the USAir Shuttle on April 12, 1992. US Airways subsequently purchased the remainder of Shuttle, Inc., on November 19, 1997, and the service subsequently operated under the name US Airways Shuttle. Shuttle, Inc., remained as a subsidiary of US Air Group until July 1, 2000, when it was merged into US Airways. In October 2015, US Airways merged with American Airlines, at which point the shuttle became the American Airlines Shuttle. [14]

Helicopter service

Trump Air operated a scheduled helicopter service between LaGuardia Airport and Wall Street Heliport to provide connections with Trump Shuttle flights at LaGuardia. [15]

Trump Air also operated between New York City and East Hampton Airport from 1989 to 1992, and between West 30th Street Heliport and Steeplechase Pier in Atlantic City to serve Trump's casinos. It used a combination of Sikorsky S-61 and Boeing Chinook helicopters. [2] [16] It was established on March 22, 1988, with three Sikorsky S-61 helicopters, which could carry 24 passengers each, with service between the West 30th Street Heliport in Manhattan and Bader Field and the Steeplechase Pier in Atlantic City. [2] Fares were from $49–125, and travel time was 48 minutes. [2] One of the helicopters had already been operating for about a month. [2] Trump had acquired the helicopters, which had been Resorts International Air, as part of his 1988 deal with Merv Griffin following Griffin's takeover of Resorts International Inc. [2] [17] [18]

Fleet

The Trump Shuttle fleet consisted of the following aircraft: [19]

See also

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References

  1. ↑ "Codes IATA/OACI by airline". www.al-airliners.be. Retrieved 2017-08-21.
  2. 1 2 3 4 5 6 "Helicopter Service Shuttles Gamblers to Casinos". Daily Record . Morristown, New Jersey. Associated Press. March 24, 1988. p. 26 (B10). Archived from the original on November 15, 2020. Retrieved November 14, 2020.{{cite news}}: CS1 maint: bot: original URL status unknown (link)
  3. ↑ Chadwick, Bruce (March 27, 1988). "Atlantic City Confidential". Daily News . New York City. p. 313 (24). Archived from the original on June 7, 2019. Retrieved November 14, 2020.{{cite news}}: CS1 maint: bot: original URL status unknown (link)
  4. 1 2 Landler, Mark (1989-06-25). "Selling the Trump Shuttle". The New York Times . ISSN   0362-4331 . Retrieved 2017-08-21.
  5. 1 2 3 4 5 Viser, Matt (2016-05-27). "Donald Trump's airline went from opulence in the air to crash landing". The Boston Globe . Retrieved 2017-08-21.
  6. 1 2 "10 Donald Trump Business Failures". Time . April 29, 2011. Retrieved January 18, 2019.
  7. 1 2 3 4 5 "Special Friday Flashback: When Trump Ran 'The Shuttle'". Airways Magazine. 2017-01-20. Archived from the original on 2017-08-21. Retrieved 2017-08-21.
  8. 1 2 Hylton, Richard D. (1991-04-16). "NWA-Trump Shuttle Deal Seen as Near". The New York Times . ISSN   0362-4331 . Retrieved 2017-08-21.
  9. ↑ Thys, Fred (2016-04-04). "Trump Shuttle's Boston Workers Recall Lavish Start Before 'Things Started to Go Down'". WBUR . Retrieved 2017-08-21.
  10. ↑ Air Transport Association 1991 Annual Report
  11. ↑ Air Transport Association 1992 Annual Report
  12. ↑ WILKINSON, TRACY (1990-06-25). "Trump Takes Mandela Under His Wing". Los Angeles Times . ISSN   0458-3035 . Retrieved 2017-08-22.
  13. 1 2 Salpukas, Agis (1991-12-20). "Deal Made On Trump Shuttle". The New York Times . ISSN   0362-4331 . Retrieved 2017-08-21.
  14. ↑ "Trump Shuttle: When President Trump Owned an Airline... And Failed". International Aviation HQ . Retrieved 2019-07-26.
  15. ↑ "Trump Air - The Trump Shuttle Connection". www.timetableimages.com. Retrieved 2017-08-22.
  16. ↑ Rattiner, Dan (January 13, 2017). "Trump's Choppers: From 1989–92 Trump Ran a Hamptons Helicopter Service". Dan's Papers . Hamptons, Long Island, New York. Archived from the original on November 15, 2020. Retrieved 2017-08-22.
  17. ↑ Stevenson, Richard W. (April 15, 1988). "Griffin Wins Resorts in Deal with Trump". New York Times . Retrieved November 14, 2020.
  18. ↑ Mufson, Steven (September 17, 1989). "The Wheel of Fortune that Went Awry". Washington Post . Retrieved November 14, 2020.
  19. ↑ "Trump Shuttle". rzjets. Retrieved 7 September 2019.
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