New Company Helps Rescue Airport from Financial Pinch

The arrival of Silver Airways to Gainesville fills one formerly expensive—and unsustainable—void.

There’s a silver lining to a cloud that has hung over Gainesville Regional Airport the past three years.

Silver Airways’ decision to move its maintenance facility to Gainesville, bringing up to 100 jobs—many of them transfers—removes the shortfall of income due to the short-lived stay of Eclipse Aviation.

In April, Silver will begin leasing the 61,000-square-foot, $11.2 million maintenance building that the Gainesville-Alachua County Regional Airport Authority built for Eclipse, a manufacturer of innovative lightweight jets designed to be used as air taxis. Eclipse’s departure three years ago, precipitated by its bankruptcy, left the airport strapped with mortgage payments on the building—which have totaled more than $1 million.

Now, Silver will cover most of the mortgage payments as well as contribute to the airport’s finances in other ways, like providing connecting flights to United Airlines, and infusing the local economy with salary dollars and purchases from local businesses.

Airport CEO Allan Penksa calls landing Silver a “blessing,” noting that not many businesses need a massive building at an airport. “I could count on one hand the number of hot prospects we had.”

The $485,000 yearly cost of the vacant building drained the airport’s budget. Penksa cut costs, raised some fees and tapped reserves to cover the shortfall. But still, he says, “Our situation wasn’t sustainable.”

If Silver hadn’t arrived and economic conditions had worsened, the airport would have needed to request that the Federal Aviation Administration authorize the use of “passenger facility fees” for emergency debt relief, Penska says. “This is allowed under the law, but it never has been done anywhere before,” he says. “The airlines are reluctant to open the door to this mechanism.”

Silver Seems Solid

Silver operates more than 100 daily trips from 29 airports in Florida, the Bahamas, Ohio, New York, Pennsylvania and West Virginia.

Silver, which continues to have its corporate office in Fort Lauderdale, is the successor of Gulfstream International Airlines, which went into Chapter 11 bankruptcy in 2010. Chicago-based Victory Park Capital Group bought Gulfstream in late 2010, paying less than $30 million, the South Florida Sun Sentinel reported.

Victory Park finances small and medium-sized companies, and its portfolio includes the Fuller Brush Company, Giordan’s restaurants, pharmaceutical company Unigene Laboratories and Ascent Aviation Services Corp. Victory Park raised $480 million from a broad group of institutional investors, endowments and foundations in November, according to the company’s website.

With Victory Park’s backing, Silver is upgrading its fleet, adding six Saab 340BPlus turboprops to its 19 Beechcraft 1900D aircraft. The turbo-prop Saabs are a big step up. They carry 34 passengers, compared to the 19 that the Beechcraft carry, and they feature a noise-cancellation system that makes them as quiet as a large jet aircraft.

Silver needed a new maintenance center because the Fort Lauderdale-Hollywood International Airport is planning to tear down its present maintenance hangar for a runway expansion, says Silver CEO Darrell Richardson.

Gainesville was competing with other suitors for Silver from South Florida as well as Ocala. With that in mind, Penksa negotiated a lease rate of about $6 per square foot, with an escalator to keep up with inflation in the sixth year and beyond.

Silver will also pick up costs that the airport has been covering, including $44,000 annually for insurance, utilities and building maintenance.

Penksa figures additional passengers coming to the airport for Silver’s flights may increase the airport’s revenue from rental car companies by 7 percent and from parking by 7 percent.

The bottom line: By the sixth year of its lease, Silver’s rent, combined with other fees it pays, is expected to cover the mortgage payments on the building.

Silver’s Richardson says Gainesville was a perfect fit for Silver. “This was the easiest decision I’ve made in my 40 years in aviation,” Richardson says. “There were a lot of cities competing for our business. We fell in love with Gainesville, and here we are.”

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