April 05, 2016

US Department of Transportation Office of the Secretary of Transportation 1200 New Jersey Avenue SE Washington DC 20590

Re: Docket DOT-OST-2016-0003, Application of SPS Air, LLC, for authority to conduct operations as a commuter air carrier 1. SPS submitted letter from Torrance Aircraft Maintenance confirming its maintenance

arrangement. However, the letter does not reflect the applicable rates for maintenance services. Please provide a copy of agreement that reflect maintenance, FBO tie-down, handling and other applicable rates. Attached as Exhibit #1 are Torrance Aircraft Maintenance Labor rates and 50/100-hour inspection rates. Attached as Exhibit #2 is the Tie Down rates which is through the City of Torrance.

2. The balance sheet submitted by SPS does not indicate the fiscal period covered. Please forward copy of the most recent (within three months of the date of application) balance sheet and Income statement stating the fiscal period covered. Although SPS Air has not begun Part 135 operations, attached is the Income Statements and Balance Sheets for CY 2013, 2014, and 2015 as SPS Air waited for our application processing.

3. The certificate of existence indicates that SPS existed since May 23, 2012, please confirm whether SPS operated during the years 2012, 2013, and 2014. If SPS conducted some operations during the previous years, please provide copy of SFS' balance sheets and income statements for the calendar year 2013, 2014, and 2015, along with the explanatory footnotes. Although SPS Air has not begun Part 135 operations, attached is the Income Statements and Balance Sheets for CY 2013, 2014, and 2015 as SPS Air waited for our application processing (Exhibit #3).

4. SPS' forecasts do not reflect payment towards salaries and benefit for SPS personnel. Please explain. We have added the benefits and payroll taxes on the salary lines. As the owner, I do not pull any salary.

5. SPS submitted its forecasted financial statements based on the start of its commuter operations as of April 2016. Please advise if the forecast remains same for any 12 months during the first year of the air carrier's commuter operation.

The forecast remains same for any 12 months during the first year of the air carrier's commuter operation. I have attached an updated Income and Balance Sheet forecast as on the end of March 2016 (Exhibit #3).

6. Exhibit #4 shows an updated SPS Air cash balance as of 05 APR 16 of $91,542.78. Exhibit #3

details the cash fitness requirement for this operation equals $43,073.

7. There is no landing fee at either KTOA or KCRQ, and there is no per/passenger charge for services at either using the public terminal at Zamperini Field (KTOA) or Magellan Aviation at KCRQ. SPS Air plans to buy fuel at Magellan Aviation.

STATEMENT OF VERIFICATION

Pursuant to title 18 United States Code section 1001, I, Michael McGee, in my individual capacity

and as the President of SPS Air, have not in any manner knowingly and willfully falsified, concealed

or covered up any material fact or made any false, fictitious, or fraudulent statement or knowingly

used any documents which contain such statements in connection with the preparation, filing or

prosecution of the application. I understand that an individual who is found to have violated the

provisions of 18 U.S.C. section 1001 shall be fined nor more than $10,000 or imprisoned not more

than five years, or both.

____________________________05 APR 16_______

Michael B. McGee

President, SPS Air LLC

1432 Via Quijano

El Paso, TX 79912

Exhibit #1

Exhibit #2

Exhibit #3

Income Statement 2013 2014 2015 Page 1

31-Dec 31-Dec 31-Dec2013 2014 2015

Income StatementUpdated: April 05, 2016 Revenue Blk Hours/Month 0 0 0

#AC 1 1 1REVENUE

Part 135 Operations 0 0 0Less Federal Excise Tax (FET) - - - Less Segment Tax - - - Passive Income (Lease aircraft to CalAir Aviation awaiting FAA processing of application) 56,367 49,076 1,451

NET Revenue 56,367 49,076 1,451

Flight Operations FIXED EXPENSESInsurance 8,452 8,637 13,138 Training 7,193 3,961 1,536 Pilot Uniforms - - - Property Tax on AC 2,611 2,641 2,403 FBO Tie-Down + Handling - 620 3,102 Avionics Subscriptions 1,036 2,007 2,516 Scheduling Software - - 904 Drug/Alcohol Program - - 400 Part 135 Certification 4,917 - 4,982 Aircraft Cleaning 2,020 1,700 1,700

(26,229) (19,566) (30,681)Flight Operations DIRECT EXPENSES

Pilot Salary, Taxes, Benefits - - 1,612 Fuel and Oil - - 2,282 Maintenance, Scheduled and Unscheduled 18,532 15,140 17,091 Landing Fees - KSMO 68 415 275 Aircraft Stock - 46 -

(18,600) (15,601) (21,261)Total Flight Operations (44,829) (35,167) (51,942)

SG&AAdvertising & marketing - - 1,091 Overhead Salary, Taxes, Benefits (Accountant) - 8,633 19,234 Tech/Comm equip - 529 915 Tech/Comm svcs 374 524 317 Travel 1,075 1,406 2,293 Professional Memberships 529 21 109 Tax Fees 181 - 1,082 CA Board of Eqalization Tax on Rental 4,095 2,952 261 Office Rent - - -

Total SG&A (6,254) (14,065) (25,302)

Total Operating Expenses (51,083) (49,232) (77,244)EBITDA 5,284 (157) (75,793)

Interest expense (12,105) (13,652) (13,255)Depreciation and amortization (8,083) (8,083) (8,083)

Pre-Tax Income (14,904) (21,891) (97,130)Income Tax 0 0 0

Post-Tax Income (14,904) (21,891) (97,130)

Income Statement Forecast Page 2

Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17Income Statement Forecast

Updated: April 05, 2016 Revenue Blk Hours/Month 0 0 22 21 23 22 21 22 20 20 21 23 20 22#AC 0 0 1 1 1 1 1 1 1 1 1 1 1 1

REVENUE TOA-CRQ $160/segment, 67%LF 0 0 14,150 13,507 14,794 14,150 13,507 14,150 14,150 12,864 12,221 14,794 12,864 14,150 Less Federal Excise Tax (FET) 7.50% - - (1,061) (1,013) (1,110) (1,061) (1,013) (1,061) (1,061) (965) (917) (1,110) (965) (1,061) Less Segment Tax $4.10/Segment - - (180) (172) (189) (180) (172) (180) (180) (164) (156) (189) (164) (180)

NET Revenue 0 0 12,909 12,322 13,495 12,909 12,322 12,909 12,909 11,735 11,148 13,495 11,735 12,909

Flight Operations FIXED EXPENSES Notes Hourly Monthly AnnuallyInsurance Annual already paid 13,138 - - - - - - - - - 13,500 - - - - Training - - - - - 500 - - - - - 500 - - - - Pilot Uniforms N/A, 2016 complete 13 150 - - 13 13 13 13 13 13 13 13 13 13 13 13 Property Tax on AC 2,400 200 200 200 200 200 200 200 200 200 200 200 200 200 200 FBO Tie-Down + Handling 106 1,272 106 106 106 106 106 106 106 106 106 106 106 106 106 106 Jeppesen Charts 108 1,292 108 108 108 108 108 108 108 108 108 108 108 108 108 108 XM Weather 71 852 71 71 71 71 71 71 71 71 71 71 71 71 71 71 Scheduling Software 100 1,200 100 100 100 100 100 100 100 100 100 100 100 100 100 100 Drug/Alcohol Program 25 300 25 25 25 25 25 25 25 25 25 25 25 25 25 25 Aircraft Cleaning 50/wk 200 2,400 200 200 200 200 200 200 200 200 200 200 200 200 200 200

Total Fixed (810) (810) (822) (1,322) (822) (822) (822) (822) (822) (14,822) (822) (822) (822) (822)Flight Operations DIRECT EXPENSES

Pilot Salary-1 Captain 50 - - 1,100 1,050 1,150 1,100 1,050 1,100 1,000 1,000 1,050 1,150 1,000 1,100 Payroll Taxes and Benefits 15.0% 8 - - 165 158 173 165 158 165 150 150 158 173 150 165 Fuel 20 gal/hr, $4/gal 80 - - 1,760 1,680 1,840 1,760 1,680 1,760 1,600 1,600 1,680 1,840 1,600 1,760 Oil Costs 2% Fuel 2 - - 35 34 37 35 34 35 32 32 34 37 32 35 Recurring MX 1K/50hr, 3K/100hr 40 - - 880 840 920 880 840 880 800 800 840 920 800 880 Engine Overhaul Reserve 37 - - 815 778 852 815 778 815 741 741 778 852 741 815 Prop Overhaul Reserve 6 - - 132 126 138 132 126 132 120 120 126 138 120 132 Landing Fees $0/landing CRQ - - - - - - - - - - - - - - - Aircraft Stock 4 - - 88 84 92 88 84 88 80 80 84 92 80 88

Total Direct 0 0 (4,975) (4,749) (5,201) (4,975) (4,749) (4,975) (4,523) (4,523) (4,749) (5,201) (4,523) (4,975)Total Flight Operations (810) (810) (5,797) (6,071) (6,023) (5,797) (5,571) (5,797) (5,345) (19,345) (5,571) (6,023) (5,345) (5,797)

SG&AAdvertising & marketing 150 1,800 150 150 150 150 150 150 150 150 150 150 150 150 150 150 Overhead sal & ben Accountant 1,800 21,600 1,800 1,800 1,800 1,800 1,800 1,800 1,800 1,800 1,800 1,800 1,800 1,800 1,800 1,800 Tech/Comm equip Already Owned - - - - - - - - - - - - - - - - Tech/Comm svcs 44.17 530 44 44 44 44 44 44 44 44 44 44 44 44 44 44 Travel 1,400 117 117 117 117 117 117 117 117 117 117 117 117 117 117 Professional Memberships 600 50 50 50 50 50 50 50 50 50 50 50 50 50 50 Tax Fees 1,100 92 92 92 92 92 92 92 92 92 92 92 92 92 92 CA Board of Eqalization Tax N/A for Part 135 - - - - - - - - - - - - - - - - Office Rent Already Owned - - - - - - - - - - - - - - - -

Total SG&A (2,253) (2,253) (2,253) (2,253) (2,253) (2,253) (2,253) (2,253) (2,253) (2,253) (2,253) (2,253) (2,253) (2,253)

Total Operating Expenses (3,062) (3,062) (8,050) (8,324) (8,276) (8,050) (7,824) (8,050) (7,597) (21,597) (7,824) (8,276) (7,597) (8,050)EBITDA (3,062) (3,062) 4,859 3,998 5,220 4,859 4,498 4,859 5,311 (9,862) 3,325 5,220 4,138 4,859

Interest expense (1,070) (1,067) (1,063) (1,060) (1,057) (1,053) (1,049) (1,046) (1,042) (1,039) (1,035) (1,032) (1,028) (1,025)Depreciation and amortization 0 (843) (843) (843) (843) (843) (843) (843) (843) (843) (843) (843) (843) (843)

Pre-Tax Income (4,133) (4,972) 2,952 2,095 3,320 2,963 2,606 2,970 3,426 (11,744) 1,446 3,345 2,266 2,991Income Tax 0 0 900 639 1,013 904 795 906 1,045 0 441 1,020 691 912

Post-Tax Income (4,133) (4,972) 3,853 2,734 4,333 3,866 3,400 3,876 4,471 (11,744) 1,888 4,365 2,958 3,903

Balance Sheet Updated 28 MAR 16 31-Dec 31-Dec 31-Dec

2013 2014 2015Assets

Current AssetsCash in Bank 9,071 294 12,496 Inventory - - 5,600 Lease aircraft to CalAir Aviation awaiting FAA/DOT processing of application 56,367 49,076 1,451 Cash Advance from Michael McGee 6,821 13,808 118,316 Total Current Assets 65,438$ 49,370$ 137,863$

Fixed AssetsAircraft 335,826 335,826 335,826 Furniture & Fixtures - - 3,000 Computer Equipment - - 1,500 Real Estate / Buildings - - 20,000 Less Accumulated depreciation (6,174) (12,174) (18,174) Total Fixed Assets 329,652$ 323,652$ 342,152$

Total Assets 395,090$ 373,022$ 480,016$

Liabilities & Net Worth

LiabilitiesAccounts Payable (incl ins, wages, tax, comp) 51,083 49,232 77,244 Taxes Payable - - - Long-term Debt 282,802 273,479 263,759 Interest Payable 12,105 13,652 13,255 Total Liabilities 345,990$ 336,363$ 354,258$

Owners' Equity (Net Worth) 49,101$ 36,660$ 125,758$

Balance Sheet ForecastUpdated 05 APR 16

Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17Assets

Current AssetsCash in Bank 91,543$ 86,563$ 81,583$ 83,624$ 85,065$ 87,355$ 89,392$ 91,178$ 93,214$ 95,562$ 83,782$ 84,748$ 87,030$ 88,559$ Inventory 5,600 5,600 5,600 5,600 5,600 5,600 5,600 5,600 5,600 5,600 5,600 5,600 5,600 5,600 Accounts Receivable - - 12,909 12,322 13,495 12,909 12,322 12,909 12,909 11,735 11,148 13,495 11,735 12,909 Total Current Assets 97,143$ 92,163$ 100,092$ 101,546$ 104,161$ 105,864$ 107,314$ 109,687$ 111,722$ 112,898$ 100,531$ 103,844$ 104,365$ 107,068$

Fixed AssetsAircraft 335,826$ 335,826$ 335,826$ 335,826$ 335,826$ 335,826$ 335,826$ 335,826$ 335,826$ 335,826$ 335,826$ 335,826$ 335,826$ 335,826$ Furniture & Fixtures 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 Computer Equipment 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 Real Estate / Buildings 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 Less Accumulated depreciation - (843) (1,686) (2,530) (3,373) (4,216) (5,059) (5,902) (6,746) (7,589) (8,432) (9,275) (10,118) (10,962) Total Fixed Assets 360,326$ 359,483$ 358,640$ 357,796$ 356,953$ 356,110$ 355,267$ 354,424$ 353,580$ 352,737$ 351,894$ 351,051$ 350,208$ 349,364$

Total Assets 457,469$ 451,646$ 458,731$ 459,342$ 461,114$ 461,973$ 462,581$ 464,111$ 465,303$ 465,635$ 452,425$ 454,894$ 454,573$ 456,432$

Liabilities & Net Worth

Liabilities

Accounts Payable (incl ins, wages, tax, comp) 3,062$ 3,062$ 8,050$ 8,324$ 8,276$ 8,050$ 7,824$ 8,050$ 7,597$ 21,597$ 7,824$ 8,276$ 7,597$ 8,050$ Taxes Payable - - 900 639 1,013 904 795 906 1,045 - 441 1,020 691 912 Long-term Debt 261,238 260,391 259,540 258,686 257,828 256,967 256,102 255,234 254,362 253,486 252,607 251,725 250,839 249,950 Interest Payable 1,070 1,067 1,063 1,060 1,057 1,053 1,049 1,046 1,042 1,039 1,035 1,032 1,028 1,025 Total Liabilities 265,371$ 264,520$ 269,554$ 268,708$ 268,173$ 266,973$ 265,770$ 265,235$ 264,046$ 276,123$ 261,907$ 262,053$ 260,156$ 259,937$

Owners' Equity (Net Worth) 192,098$ 187,126$ 189,178$ 190,634$ 192,941$ 195,000$ 196,811$ 198,875$ 201,256$ 189,512$ 190,517$ 192,842$ 194,417$ 196,496$

Activity Forecast Page 5

SPS Air Activity - Torrance (KTOA) to San Diego/Carlsbad (KCRQ)

Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17# Aircraft 1 1 1 1 1 1 1 1 1 1 1 1# MX Bases 1 1 1 1 1 1 1 1 1 1 1 1# Days/month 22 21 23 22 21 22 22 20 19 23 20 22# Days/week 5 5 5 5 5 5 5 5 5 5 5 5# Segments/aircraft/day 2 2 2 2 2 2 2 2 2 2 2 2# Blk Hours/Segment 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5# Blk Hours 22 21 23 22 21 22 20 20 21 23 20 22# Segments 44 42 46 44 42 44 44 40 38 46 40 44

Notes:1 Based on actual Segment count for all months for each aircraft.2 All segments are 0.5 Blk hours3 Weekday holidays are excluded from # Days/month.

Available Seats 132 126 138 132 126 132 132 120 114 138 120 132ASM 11220 10710 11730 11220 10710 11220 11220 10200 9690 11730 10200 11220Load Factor 67% 67% 67% 67% 67% 67% 67% 67% 67% 67% 67% 67%RPM 7517 7176 7859 7517 7176 7517 7517 6834 6492 7859 6834 7517

Financial Fitness RequirementUpdated: April 05, 2016

Pre Operating Expenses (6,124)

Pre Operating Loan Payment (3,828)

Total year Operating Expense with no Income (109,513)

1 Qtr Operating expense with no Income (27,378) 1 Qtr Loan Payments (5,742)

Total cash reserve required (43,073)

Exhibit #4

Exhibit #5

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