DOT ‘Encouraged’ But Wants More Info from ADI

YOUNGSTOWN, Ohio — The U.S. Department of Transportation is “highly encouraged” by the actions Aerodynamics Inc. has taken to alleviate the concerns expressed in its Jan. 22 show cause order (READ STORY), but is requesting additional information before it signs off on withdrawing that filing.

“For example, more information is required concerning any relationships and agreements that” Scott Beale, the company’s former CEO and owner, “may have with ADI’s new management and board,” states a letter to ADI’s legal counsel obtained by The Business Journal. The letter, dated Feb. 13, is signed by Lauralyn J. Remo, chief of the DOT’s Air Carrier Fitness Division, Office of Aviation Analysis.

In Transportation’s show cause order, it proposed not only to deny ADI’s application to amend its certification to provide daily passenger service for Youngstown-Warren Regional Airport in Vienna Township, but questioned the carrier’s fitness to operate based on a fraud finding against Beale and his failure to disclose that to the department.

“Our tentative findings in this case were based on ADI’s failure to demonstrate that it possesses the managerial competence necessary to oversee its current charter and proposed scheduled operations and the proper compliance disposition and regard for the laws and regulations governing its services,” stemming from Beale’s involvement as ADI’s sole owner, president, CEO and chairman of the board, the document states.

“In this regard, the department is highly encouraged that ADI has taken immediate action to alleviate some of the concerned raised” by the show cause order, the letter continues. Specifically, ADI provided a letter from Beale stating that he had resigned from his roles with the company; documents naming Beale’s replacement and appointing a new board of directors for the company, and a declaration from Beale committing to sell his ownership interest in ADI and to place his shares in a voting trust while a “suitable buyer” is sought.

Nevertheless, the letter states the record doesn’t contain “sufficient information” to “warrant withdrawing the show cause order and/or confirming ADI’s management and board member changes” to satisfy Transportation’s “managerial and compliance disposition requirements. For example, more information is required concerning any relationships and agreements that Mr. Beale may have had with ADI’s new management and board.”

The Department of Transportation called for ADI to:

• Provide “an explanation and copy of all written agreements and a summary of all oral agreements” between ADI and its related entities and Beale and his related entities,” as well as between Beale “and/or ADI and/or entities in which either are affiliated, and the air carrier’s proposed board members and/or entities of which any proposed board member is affiliated.”
• Describe any relationships – “blood, family or legal” – between Beale and any proposed board members.
• With regard to the voting trust and proposed trustee, provide “an explanation and copy of all written agreements and a summary of all oral agreements between” Beale, ADI or their related entities along with any relationships between Beale and the proposed trustee, and citizenship and compliance information for the proposed trustee.
• Describe the process used to select F. Darrell Richardson as ADI’s president and the relationship between ADI and Business Aircraft Group Inc. in Beechwood.
• Clarify whether ADI’s request for 30 days to place Beale’s share in a trust and 120 days for completion of the sale of the shares is meant to be concurrent or consecutive days.

The department said it found “reasonable” ADI’s requested time frames of 30 days for Beale to place his shares in a voting trust and 120 days for completing the sale of those shares. While ADI has taken “preliminary measures” to insulate itself from Beale’s influence, “his continued ownership interest still presents an issue with respect to ADI’s fitness,” and the department intends to defer action within ADI’s requested timeframe to permit Beale to sell his shares and allow ADI to provide updated fitness information, the letter states.

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