THE INTERVIEW: AVIATION ASSET MANAGEMENT CEO GLEN LANGDON! (PART 2 OF 3)

___

MM: Today, Glen I really want to get into the nitty-gritty of the personal side of your job. And I say this because yesterday, my intent was to briefly have you open our eyes to the business side of an industry we all read about in the newspapers and see on television. But the Eastern Airlines story was quite emotional with a very bitter and sometimes physically violent strike that was captured on CNN and other media outlets playing out before the country and the world. You came in very much "after the fact" and had your own assignment I know---to mop up--if you'll excuse my sounding rather crude here--a real mess. Give us some idea what the overall experience was like for you?

_____

Langdon: Well, Michael the Eastern assignment was particularly challenging for me because the Eastern shutdown affected so many people, ranging from employees through customers to creditors and competitors, that it was impossible to perform the tasks at hand without bumping up against emotionally-charged issues which had to be handled with sensitivity. Former Eastern pilots would call to plead with me not to sell a particular aircraft, to which they had some sense of attachment, but to donate it to a museum or to an ex-employee group.

_____

MM: Yeah, very much so. I can believe that because as Marty Shugrue told me over coffee years ago, "We weren't just talking about livelihoods. We were talking about people's lives!" Glen, give us a few "behind the scenes" experiences you encountered?

_____

Langdon: Here are a few "behind the scenes" experiences: During the 1995-98 time frame, Venezuela was under strict currency restrictions which severely limited the abilities of its airlines ASERCA, AVENSA and SERVIVENSA to export capital in the form of rental payments owed to the ESLT (the Eastern Secured Liquidation Trust). The complicated political contacts and connections I had to make in order to actually collect the cash was challenging. I spent a lot of time in both Valencia with the management of ASERCA, and in Caracas with the management of AVENSA/SERVIVENSA and with various Venezuelan bureaucrats. With the management of both airlines, we negotiated repayment in full of the amounts owed. But...in the end, every payment had to be hand-collected.

_____

MM: So, there you are in a foreign country and suddenly it begins to unravel like a Bruce Willis "Die Hard" movie as I understand it?

_____

Langdon: In the former AVENSA/SERVIVENSA situation, which involved seven Douglas DC-9-31's, there were several moments which gave me some anxiety. One day, at the invitation of Henry Lord Boulton the Chairman and CEO of AVENSA, I flew to Caracas. The passengers at Caracas normally disembarked down truck-mounted air stairs onto the tarmac and then walked into the terminal building where they cleared customs and immigration and picked up their baggage. On this occasion, in a break with routine, I was met at the bottom of the air stairs by two large men in identical blue suits and sunglasses standing in front of a black limousine.

_____

MM: A dress rehearsal for "Men In Black"! Only these guys were not in a good mood, right?

_____

Langdon: It was something else. One asked for my passport and the other pushed me into the car. A third man, the driver, stomped on the accelerator the second the door was closed. We drove across the tarmac, through 2 security gates without slowing down and then we blew through downtown Caracas to AVENSA's headquarters. The meeting with Mr. Boulton was very pleasant and productive and 3 hours later I was back in the car headed to the airport. I was handed my passport and dropped at the regular check in area in front of the terminal. In the passport control line I became concerned as I realized there was no entry stamp in my passport. When I reached the glassed in cubicle and handed over my passport, the man inside the booth became very agitated and shouted to several armed security guards posted nearby who stepped around me in such a way as to prevent me from moving from the spot. There was considerable loud but muffled discussion in Spanish going on inside the booth between the man waving my passport around and three other passport control officers. With hand gestures only and without explanation, I was then escorted by a team of four armed security guards to a small second floor room with no windows and only a metal desk and a metal folding chair. They locked me in and left.

_____

MM: About this time, I'd be thinking "They are going to execute me".

_____

Langdon: Well, I'll tell you. An hour and a half later and with only seconds remaining until my scheduled return flight to Miami, the door was unlocked by a very pretty young woman in a business suit who handed me my passport as she explained in flawless, unaccented English that there had been a mix up which had now been cleared up and please follow her quickly as they were holding the outbound aircraft at the gate. Later, as I slumped in my seat looking out the window at the Caribbean far below, I speculated on that alternative scenario that you mentioned.

_____

MM: Only in my case, Glen I would have required a change of underwear!

_____

Langdon: (Mutual laughter) And then, in the ASERCA situation, which involved four DC-9-31's, there was another moment which caused serious anxiety. On my first trip to Caracas, I made arrangements to meet with the CFO (Chief Financial Officer) of the airline who, it was explained to me, would fly from Valencia to Caracas for the meeting the next day. Later that evening, I received a message that there had been a change of plan and a car would be sent for me to travel to Valencia instead.

___

MM: Aha! What was your thought at that point?

___

Langdon: No problem. The next morning, the driver from ASERCA picked me up at the hotel in a big black Mercedes at the appointed hour and off we drove.

_____

MM: Always a black limousine. These guys must watch "The Godfather" trilogy as a hobby---nobody to play games with. I'm sorry, Glen. Go ahead.

_____

Langdon: I attempted to make small talk with the driver and, given our inability to speak the other's language, we communicated fairly well. However, I became increasingly nervous because the driver never allowed the speedometer to drop below 120 miles per hour. I asked why he was driving so fast and was met with silence. The scenery was racing past the windows in a blur. I persisted and asked him to slow down. No answer. I asked again. This time the driver whipped out his cell phone and dialed one-handed as he sped down the road.

____

MM: Good God.

_____

Langdon: After several minutes of rapid fire Spanish, the driver handed the cell phone to me - it was the Chief of Maintenance for the airline on the other end - and he explained in English that the stretch of highway that we were on was infamous in Venezuela for armed holdups complete with barricades and machine guns and the kidnapping for ransom of foreign businessmen.

_____

MM: I'm almost afraid to ask you about SARO (a Mexican airline that collapsed with enraged employees that were not paid for months)?

_____

Langdon: The SARO situation in Monterrey, Mexico was completely different from either of the Venezuelan situations. SARO had previously collapsed financially, all of the employees were laid off, and the two remaining ESLT-owned (ex-Eastern Airlines) DC-9-31 aircraft were parked. The Mexican DGAC (their Directorate General of Civil Aviation) was unhappy because the airline had made commitments to serve airports in Northern Mexico, which it did not keep.

_____

MM: Harkens back to the old saying, 'This is no way to run an airline', right Glen?

_____

Langdon: Well, the airline had left many unpaid obligations for airport gate rentals as well as for navigation and landing fees. The airport manager at Monterrey was being criticized for not being more alert to the financial troubles of SARO. As a result of this bickering, the Mexican DGAC was initially not cooperative about de-registering the aircraft from the Mexican register and/or permitting the aircraft to leave Mexico pending payment of the unpaid fees.

_____

MM: Glen, excuse me for cutting back in. Just so my readers understand, the registration numbers you are talking about can be seen painted near the tail sections of U.S. airliners and usually begin with the letter "N". Correct?

_____

Langdon: That's right.

_____

MM: Please continue.

_____

Langdon: I appealed to the US Embassy in Mexico City to intercede with the DGAC on behalf of the Eastern Secured Liquidation Trust to de-register and export the aircraft back to the US. Ultimately, this tactic was successful and the aircraft were de-registered and ready to be flown to Mojave, California. In the meantime, SARO's furloughed maintenance employees were very unhappy about not being paid. The members of the labor union had physically hijacked the technical records for the two aircraft, divided them up between various private homes of ex-employees in Monterrey, and were holding the records hostage until they were paid their back wages.

___

MM: What a headache!

___

Langdon: For several months, I attempted to negotiate the release of the technical records through members of the former management of SARO in return for a financial settlement of their claims. These discussions collapsed as management began to pursue its own financial settlement agenda and to become complicit in the ransoming of the records. At the request of the union, the airport manager had the aircraft towed away from the main terminal and parked in a field well away from paved surfaces and runways to prevent us from repossessing the aircraft. I hired 4 American Airlines pilots to fly to Monterrey for the purpose flying the two DC9-31 aircraft back to the US.

_____

MM: Excuse me, Glen. Of course, I'm assuming you hired the American Airlines pilots because they used to operate the twin engine rear-mounted DC-9's until what? Twelve years ago? They were certified on that aircraft.

_____

Langdon: Yes, they were. And they did fly the nines at one time. So, the pilots checked into motels surrounding the airport on the day before the planned flights. Flight plans were filed to fly from Monterrey, Mexico to San Antonio, TX at 10:00 PM the following evening. The next night our pilots boarded both aircraft, started the engines and taxied across the fields to the runways where they were prevented from taking off by several pickup trucks full of armed ex-employees and armed policemen.

___

MM: Armed militants and police together?

___

Langdon: That was the situation, yes! Mexican legal counsel was then authorized to circumvent the management group and to hold settlement meetings directly with the union members. The attorney made various payments and took possession of the technical records. However, the technical records were incomplete, thereby preventing maximum financial recovery from a sale. The aircraft were physically relocated back to the US.The aircraft were finally sold to another Mexican airline - AEROCALIFORNIA - with plans to operate from Baja, California to Monterrey, Los Angeles and various other cities and a willingness to deal with the demands of the militant ex-SARO employees. The technical records were finally reassembled and the aircraft re-deployed into revenue service.

_____

(Glen concludes our visit tomorrow with a candid look at the future of the airline industry in the United States).