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February 19, 2021

BY EMAIL

Ms. Lauralyn J. Remo

Chief, Air Carrier Fitness Division

Office of Aviation Analysis

U.S. Department of Transportation

1200 New Jersey Ave. S.E.

Washington, D.C. 20590

Re: Eastern Airlines Fleet Expansion Request

Dear Ms. Remo:

Based on approvals of the Fitness Division, Eastern Airlines currently operates 10

aircraft,1 six of which can be used for scheduled service. Eastern now respectfully requests

approval to increase its total fleet to 18 aircraft and to use eight aircraft for scheduled operations.

Over the last year Eastern has continued to demonstrate the high capability of its employees and

their commitment to excellence. While initiation of the planned expansion of Eastern’s

scheduled service has been slowed by the pandemic, the airline continues to move forward with

full support of the FAA.

Specifically, Eastern has purchased two B777-200ER aircraft and intends to enter these

two aircraft into commercial service during the second quarter of 2021 once certification is

approved by the FAA. In addition, Eastern will be leasing two B777-200 freighters to operate

Aircraft, Crew, Maintenance, and Insurance (ACMI) charters. Eastern expects the certification

process for the B 777s to be completed on or before April 1, 2021. Importantly, Eastern has met

all the requirements of the Air Mobility Command (AMC) and been approved by the Commercial

Airlift Review Board (CARB). Based on this approval, Eastern has been awarded a contract for

passengers from the U.S. Department of Defense to support of the Civil Reserve Air Fleet

(CRAF)(HTC711-20-D-CC02). International Charter Airlift Services

The expected increase in the demand for Eastern’s services under the DOD contract, the

ability to charter the B777 freighters on an ACMI contract and the addition of new scheduled

service routes described below will require the 18 aircraft Eastern is requesting. Given the

pandemic, it is especially important that Eastern be right-sized to operate at peak efficiency, which

is not possible with the current fleet restrictions. Currently, both flight crews and maintenance

1 Although Eastern has an excellent safety and operational record, the Department has not authorized an increase in

its total fleet size since 2015.

Eastern Airlines, LLC

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personnel are underutilized. For example, Eastern can operate all the new scheduled service

referenced below without adding any flight crew, maintenance personnel or infrastructure.

Throughout 2020, via extensive coordination with the Department of State, OST,

government and aviation authorities of Canada and Latin American countries, and diplomatic

offices on U.S. and foreign soil, Eastern provided close to 200 repatriation flights to many

countries, including, e.g. Argentina, Canada, Chile, El Salvador, Ecuador, Guyana, Haiti,

Honduras and Peru. Eastern successfully repatriated over 40,000 individuals including young

exchange students, passengers with special needs at no cost to the U.S. or foreign

governments. Former Secretary Pompeo on many occasions highlighted the success of the

repatriation effort by U.S. carriers and, importantly, a Former Assistant Secretary of State and

many other government officials specifically thanked Eastern for its outstanding work in

repatriating citizens.

Now, Eastern must respond to both the continuing difficult economic conditions and

rapidly evolving health and safety requirements imposed by the Centers for Disease Control (CDC)

and peer agencies abroad. Eastern only operates international flights, so the CDC’s requirement

for testing of international passengers arriving in the U.S. raised a substantial challenge and

additional requirements would require Eastern to adapt further. Eastern is the only U.S. low-fare

carrier that operates wide-bodied aircraft, which, as seen during the repatriation effort last year,

enables Eastern to provide important public interest benefits through international service to

destinations beyond the range of other US low fare airlines. The requested additional aircraft will

allow Eastern to successfully serve the public during this ongoing pandemic.

In support of this request, Eastern provides the following information:

Current Financial Position:

A current balance sheet and a current income statement both ending December 30, 2020, is

attached as Exhibit A. As of December 31, 2020, Eastern Airlines had Current Assets of

$27.0 million and Current Liabilities of $18.5 million resulting in a working capital balance

of $8.5m. All financial information in this submission was prepared by Dragan Djordjevic,

Eastern’s Chief Financial Officer.2

Summary of Eastern’s current operations and operating plans for the next 12 months:

The baseline scheduled service routes include:

1. New York, NY (JFK) – Georgetown, Guyana (GEO);

2. New York, NY (JFK) – Anchorage, AK (ANC);

3. Miami, FL (MIA) – Georgetown, Guyana (GEO);

2 Mr. Djordjevic joined Eastern as CFO in October 2020. He is a U.S. citizen, and his resume is attached as Exhibit

D.


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4. Miami, FL– Toronto, CA (YYZ) via GEO);

5. New York, NY (JFK) – Guayaquil, Ecuador (GYE);

6. Miami, FL (MIA) – Guayaquil, Ecuador (GYE);

7. Miami, FL (MIA) – Asuncion, Paraguay (ASU).

The seven incremental schedule routes (pending foreign government approvals as required)

for the pro forma twelve-month period includes:

8. New York, NY (JFK) – Quito, Ecuador (UIO);

9. Miami, FL (MIA) – Quito, Ecuador (UIO);

10. Miami, FL (MIA) – Santo Domingo, Dominican Republic (SDQ);

11. Los Angeles, CA (LAX) – Guayaquil, Ecuador (GYE);

12. Boston, MA (BOS) – Belo Horizonte, Brazil (CNF);

13. Miami, FL (MIA) – Belo Horizonte, Brazil (CNF);

14. New York, NY (JFK) – Belo Horizonte, Brazil (CNF);

Eastern already operates charter and scheduled service from JFK, BOS and MIA and has adequate

personnel and infrastructure to support these additional routes as well as the expected DOD and

ACMI charter flying.

Pro Forma Income Statement and Balance Sheet – 12 Month Operating Expenses:

A detailed pro forma income statement and balance sheet for the next 12 months, broken

down between Eastern’s current operations and its proposed expanded operations, are

attached as Exhibits B and C.3 The total operating expenses associated with the increased

flying are estimated to be approximately $28.3 million during the first year. Based on this

forecast, the three months’ average of operating expenses is approximately $7.1 million.

Pre-Operating Expenses:

Three Month Financial Requirement

3 A Motion for Confidential Treatment of projected revenues in these exhibits is being filed concurrently with this

letter.

Introductory advertising $115,000

CNF station startup $65,000

UIO station startup $55,000

SDQ station startup $40,000

LAX station startup $65,000

Legal expenses $25,000

B777-200 cargo certification $35,000

Total $390,000


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Combined with the start-up costs remaining as of the date of this application, the total

capital required to meet the Department’s financial fitness test is thus $7.2 million.

Eastern’s current working capital balance of $8.5m exceeds the capital required.

Compliance

Eastern has one pending matter with the Office of Consumer Affairs regarding the

operation of certain repatriation flights between Miami and Ecuador/Venezuela at the

request of the U.S. embassies in those countries and the Venezuelan and Ecuador

governments during 2020.

As Eastern expects the FAA’s B777 certification process to be completed on or before

April 1, 2021, a timely review and decision would be greatly appreciated.

Sincerely,

Joanne W. Young

David M. Kirstein

Counsel for Eastern Airlines, LLC

cc: Dockets OST-2014-0071, 2019-0029, and 2019-0174

Mr. Todd Homan,

Director, Office of Aviation Analysis

Mr. Damon Walker,

Air Carrier Fitness Division

Eastern Airlines, LLC Fleet Expansion Request

Exhibit List

Exhibit Description

A-CONFIDENTIAL Current Balance Sheet and a Current Income Statement

B-REDACTED Pro Forma Income Statement

C-REDACTED Pro Forma Balance Sheet

D Dragan Djordjevic Resume


EXHIBIT A-Excluded for Confidentiality


EXHIBIT B

Eastern Airlines LLC

Proforma Income Statement

CharterScheduled Service

CargoFS charterCRAFDomesitc DODScheduled service Ancillary revenueTotal revenue

Aircraft rentsAircraft reservesMaintenanceGround operations and feesFuelFlight crew expensesFlight crew travelOther operating expenses

Total cost of sales

Gross profitMargin - %

Staff compensation & benefitsGeneral facilitiesSales & marketingTravel & office adminLegal & professional feesInsurance

Total SG&A

EBITDAMargin - %

Depreciation and amortizationInterest expenseOther expenses

Pre-tax income / (loss)Income taxesNet income / (loss)

Margin - %

Cargo TotalsDeparturesBlock hours

Charter TotalsDeparturesBlock hoursAvailable seat miles (ASMs) (thousands)Passengers carriedRevenue passenger miles (RPMs) (thousands)

Scheduled Service TotalsDeparturesBlock hoursAvailable seat miles (000s)Passengers carriedRevenue passenger miles (000s)

OPERATING DATA:

1st

Quarter2nd

Quarter3rd

Quarter4th

Quarter12-month

Total1st

Quarter2nd

Quarter3rd

Quarter4th

Quarter12-month

Total1st

Quarter2nd

Quarter3rd

Quarter4th

Quarter12-month

Total

Combined : Baseline + IncrementalIncremental : Proposed 7 additional scheduled routes + increased DOD CRAF charters + Cargo operationsBaseline : Current charter and 7 scheduled routes

- - - - 210,000 630,000 630,000 630,000 2,100,000 210,000 630,000 630,000 630,000 2,100,000 - - - - - - - - - - - - - -

1,365,640 1,484,225 1,453,160 1,425,805 5,728,830 (88,746) 307,389 323,709 329,714 872,066 1,276,894 1,791,614 1,776,869 1,755,520 6,600,897 3,700,180 3,700,840 3,700,840 3,580,225 14,682,085 2,086,609 3,147,001 3,147,001 3,044,478 11,425,090 5,786,789 6,847,841 6,847,841 6,624,703 26,107,175 2,586,916 2,886,547 2,824,111 2,741,140 11,038,714 1,314,473 1,981,419 1,981,419 1,923,161 7,200,470 3,901,389 4,867,966 4,805,530 4,664,300 18,239,184 3,066,417 3,131,967 3,175,667 3,139,506 12,513,556 210,013 1,125,291 1,106,891 1,104,322 3,546,518 3,276,430 4,257,258 4,282,558 4,243,828 16,060,074

248,597 253,727 257,147 254,317 1,013,788 16,436 88,066 86,626 86,425 277,554 265,033 341,793 343,773 340,742 1,291,341 577,381 569,587 577,381 569,587 2,293,936 - - - - - 577,381 569,587 577,381 569,587 2,293,936

11,545,131 12,026,893 11,988,306 11,710,581 47,270,910 3,748,785 7,279,166 7,275,646 7,118,100 25,421,697 15,293,916 19,306,059 19,263,952 18,828,681 72,692,607

2,274,469 4,958,883 5,633,233 6,713,762 19,580,347 5,723,337 12,390,368 13,033,412 13,945,591 45,092,709 7,997,806 17,349,251 18,666,646 20,659,352 64,673,055 16.5% 29.2% 32.0% 36.4% 29.3% 60.4% 63.0% 64.2% 66.2% 63.9% 34.3% 47.3% 49.2% 52.3% 47.1%

1,991,169 2,010,145 2,034,970 2,061,627 8,097,911 - - - - - 1,991,169 2,010,145 2,034,970 2,061,627 8,097,911 193,275 193,275 193,275 193,275 773,100 - - - - - 193,275 193,275 193,275 193,275 773,100 846,248 923,490 972,856 1,025,713 3,768,307 432,979 776,206 821,801 867,537 2,898,523 1,279,227 1,699,696 1,794,658 1,893,249 6,666,830 226,500 226,500 226,500 226,500 906,000 - - - - - 226,500 226,500 226,500 226,500 906,000 37,500 37,500 37,500 37,500 150,000 - - - - - 37,500 37,500 37,500 37,500 150,000

733,115 733,115 733,115 733,115 2,932,460 - - - - - 733,115 733,115 733,115 733,115 2,932,460

4,027,807 4,124,025 4,198,216 4,277,730 16,627,777 432,979 776,206 821,801 867,537 2,898,523 4,460,785 4,900,231 5,020,018 5,145,266 19,526,300

(1,753,338) 834,858 1,435,017 2,436,032 2,952,569 5,290,358 11,614,162 12,211,611 13,078,054 42,194,186 3,537,021 12,449,020 13,646,628 15,514,086 45,146,755 (12.7%) 4.9% 8.1% 13.2% 4.4% 55.9% 59.0% 60.1% 62.1% 59.8% 15.2% 34.0% 36.0% 39.3% 32.9%

2,036,315 2,044,560 2,017,464 1,984,464 8,082,804 - - - - - 2,036,315 2,044,560 2,017,464 1,984,464 8,082,804 661,909 657,640 653,328 648,974 2,621,851 - - - - - 661,909 657,640 653,328 648,974 2,621,851

- - - - - - - - - - - - - - -

(4,451,562) (1,867,343) (1,235,775) (197,406) (7,752,085) 5,290,358 11,614,162 12,211,611 13,078,054 42,194,186 838,796 9,746,820 10,975,836 12,880,648 34,442,100 - - - - - - - - 1,921,974 - - - - 1,921,974 -

(4,451,562) (1,867,343) (1,235,775) (197,406) (7,752,085) 5,290,358 11,614,162 12,211,611 11,156,080 42,194,186 838,796 9,746,820 10,975,836 10,958,675 34,442,100 (32%) (11%) (7%) (1%) (12%) 56% 59% 60% 53% 60% 4% 27% 29% 28% 25%



System TotalsDeparturesBlock hoursAvailable seat miles (000s)Passengers carriedRevenue passenger miles (000s)

Key Performance IndicatorsRevenueFleet sizeNumber of scheduled service routes (eop)Revenue per block hour ($)RASM (cents)PRASM (cents)Average fare (scheduled service)Ancillary revenue per passenger

Operating statisticsTotal system statisticsPassengersRevenue passenger miles (RPMs) (thousands)Available seat miles (ASMs)(thousands)Load factorOperating expense per ASM (CASM)(cents)Fuel expense per ASM (cents)Operating CASM, excluding fuel (cents)ASMs per gallon of fuelDeparturesBlock hoursAverage seats per departureTotal miles flownAverage stage length (miles)Average stage length (block hours)Average number of operating aircraft during periodAverage block hours per aircraft per dayFull-time equivalent employees at end of periodFuel gallons consummed (thousands)Average fuel cost per gallon ($)Scheduled service statistics:PassengersRevenue passenger miles (RPMs) (thousands)Available seat miles (ASMs)(thousands)Load factorDeparturesBlock hoursTotal passenger revenue per ASM (TRASM)(cents)Average fare - scheduled serviceAverage fare - air-related productsAverage fare - totalAverage stage length (miles)Fuel gallons consummed (thousands)Fuel expense ($) (thousands)Average fuel cost per gallon ($)

1st

Quarter2nd

Quarter3rd

Quarter4th

Quarter12-month

Total1st

Quarter2nd

Quarter3rd

Quarter4th

Quarter12-month

Total1st

Quarter2nd

Quarter3rd

Quarter4th

Quarter12-month

Total




Market statisticsJFKGEOPassengersPassenger revenue, base fare, net ($)DeparturesBlock hoursNumber of one-way seatsAvailable seat miles (ASMs)(thousands)Revenue passenger miles (RPMs) (thousands)Load factorAverage stage length (miles)Total passenger revenue per ASM (TRASM)(cents)Average fare - scheduled serviceJFKGYEPassengersRevenueDeparturesBlock hoursNumber of one-way seatsAvailable seat miles (ASMs)(thousands)Revenue passenger miles (RPMs) (thousands)Load factorAverage stage length (miles)Total passenger revenue per ASM (TRASM)(cents)Average fare - scheduled serviceMIAGYEPassengersRevenueDeparturesBlock hoursNumber of one-way seatsAvailable seat miles (ASMs)(thousands)Revenue passenger miles (RPMs) (thousands)Load factorAverage stage length (miles)Total passenger revenue per ASM (TRASM)(cents)Average fare - scheduled service

1st

Quarter2nd

Quarter3rd

Quarter4th

Quarter12-month

Total1st

Quarter2nd

Quarter3rd

Quarter4th

Quarter12-month

Total1st

Quarter2nd

Quarter3rd

Quarter4th

Quarter12-month

Total



EXHIBIT C

Eastern Airlines LLCProposed PeriodBalance sheet

Proposed period Proposed period

Current liabilitiesTrade payables 2,102,477Accrued payroll 525,619Accrued taxes and fees 2,330,671Air traffic liability 8,434,293Current portion of IRS reorganization liability 1,798,042Other short-term liabilities 34,938Other current liabilities 0Total current liabilities 15,226,041

Fixed assets (net of depreciation) Long term liabilitiesOffice equipment Long-term portion of IRS reorganization liability 306,716Software Long-term portion of note payable - aircraft 54,091,755Vehicles and ground equipment Long-term portion of note payable - other 0Furniture, fixtures and equipment Total liabilities 69,624,512Airports, stations and leasehold improvementsAircraft Members' equityCapitalized maintenance checks Members' equity 129,085,987Aircraft improvements Cumuilative members' drawings 789,456Tooling and other equipment Retained earnings / (deficit) (63,850,162)Aircraft engines Total members' equity 63,883,603Landing gear Total liabilities and members' equity 133,508,115Other aircraft componentsCapitalized aircraft certification costsAircraft rotablesLeasehold improvementsPassenger reservation systemOther Capitalized CostGoodwill, intangible assetsTotal assets

YEYE


EXHIBIT D

Dragan Z. Djordjevic 16 Eagleview Ln, Schwenksville, PA19473

USA

[email protected] (404) 509-8282

SUMMARY A senior level executive with extensive hands-on experience and track record of successful

accomplishments in managing Company finances and working in coordination with the board of directors

to increase revenues and elevate profitability.

WORK EASTERN Airlines– Wayne, PA 10/20-Present

EXPERIENCE Chief Financial Officer (CFO)

• Manage and oversee Company’s finance, accounting, treasury, risk insurance, and facility needs.

• Help in setting policy, procedures, and processes throughout the entire Company in each of these areas

and acts as counselor to President & CEO.

• implement the company’s financial strategies, policies, and programs, overseeing all finance-related

activities including accounting and control, corporate finance, capital markets, cash management,

operating and capital budgeting, financial reporting, financial planning and analysis, compliance, risk

management, and internal audit

• Oversee and manage ongoing financial performance against plans and budgets, on a quarterly,

monthly, weekly, and daily basis.

• Establish and maintain financial and management accounting policies, managing policy changes and

the resolution of accounting issues.

• Develop and maintain appropriate policies and procedures which ensure that cost budgets are

rigorously adhered to and that resources are utilized carefully.

• Support the company’s asset acquisition and disposition processes, reviewing commercial agreements

and providing analysis of investment financial parameters, ROI, capital requirements, risks, system

requirements, and implementation plans.

• Oversees the company’s insurance programs, both aviation and general corporate.

• Serve as a key liaison with key external financial partners including banks, lessors, credit card

processors, and the investor group.

InTech Aerospace and Ranger Aerosystems – Houston, TX 02/15-10/20

Azalea Capital and Argosy Capital Group

CFO/Controller 02/15-Present

• Managing all Financial aspects of a $16M Company and reporting directly to CEO and BOD

• Valuations of prospective acquisitions including comprehensive Packets to The Board and Investor

Groups

• Strategic assessment of current Market Trends, and positioning Company’s Sales Team to target

specific Customers and Product Lines

• Developed Company’s first year of GAAP Accounting practices, and prepared the company for the

First ever Third Party Annual Financial Audit

• Successfully completed five consecutive 3rd Party Financial Audits without any finding or adjustments

• Full assessment and adjustment of current Quantum System (Inventory, Purchasing, Financials) to

accommodate Live Reporting, Project Profitability and Automatic Purchasing Min./Max levels

• Established productivity driven KPIs tied to executive and director bonus structure

• Cash and Balance Sheet Management – Debt, Amortization, LOC, Depreciations and Payroll

• Inventory Management and identifying and selling stale Inventory. Purchasing methodology based

formula driven min/max, and bulk vs. individual parts purchase (usage volume, time value of money,

etc.)

• Compiling Annual Budget, Monthly Forecasts and Monthly Flash Reports

• Comprehensive Month-End Close and Reporting Packets for Senior Management and Board of

Directors

• Developed prudent Cost Controls related but not limited to Purchasing, Labor Productivity, and

Capital Appropriation

• Established a Profitability Model by Department, Customer, and Work Order to further dissect and

understand the composition of Company’s strengths and weaknesses.

5

Silver Airways – Fort Lauderdale, FL 10/13-02/15

Victory Park Capital

VP Finance 10/13-02/15

• Lead Finance Team of 30 Professional in Finance and Profitability/Revenue Management

• Overview of Internal Financials including Month-end, Quarterly and Annual Reports

• Improved 40 day Monthly Close process to 7 working days in three-month period

• Established weekly (real time) Financial and Operational Reporting to support sound Operational and

Financial decisions

• Sale and acquisition of Aircraft, Stale Inventory, and Ground Support Assets

• Managed Borrowing Base through three major Investor Groups and Banks

• Implemented a Company Wide Cost Cutting Initiative Program

• Renegotiated Major Aircraft Maintenance support Contract.

• Year-End Audit Management

• Developed Segment Profitability Model to follow revenue/cost trends for each city and city pairing

ExpressJet, Inc. - Atlanta, GA 10/05-10/13

Director – Financial Planning and Analysis 12/10-10/13

• Direct a team of twelve professionals including three general managers.

• Responsible for Annual Budget, monthly Forecasting and month-end “flash” reports for the company.

• Point of contact for revenue contracts and monthly settlements with Delta and United airlines.

• Established controls and benchmarks for cost cutting initiatives within the company to meet

profitability goals

• Member of Labor Union Negotiating team – Financial support.

• Developing productivity and utilization models to support divisional VPs in meeting monthly financial

objectives

• Oversight of divisional controllers during monthly close process and major accounting policies (GAAP)

GM – Finance 12/07-12/10

• Provide financial support to operating divisions managing up to four professionals.

• Responsible for the month-end financials to VP Finance and Heads of operating divisions.

• Lead on financial modeling and quantifying Labor Contract Negotiations (ALPA, AFA, and PAFCA).

• Manage numerous in-depth financial analysis including Labor, Fuel, and Heavy Maintenance.

• Revise and provide financial support for operational contracts.

• Support and assist the team in divisional cost cutting initiatives and summarize the results for the

Officer group.

• Coordinated and managed due diligence items in ExpressJet acquisition.

• Streamlined financial processes in the acquired entity (XJT), to accommodate ASA’s current

accounting and financial practices.

Manager Finance – Maintenance, Flight Operations and In-Flight 10/05-12/07

• Managed a team of three analysts in month-end close, budget and statistical analysis.

• Coordinated Capital Project requests, business cases and financial assessments.

• Lead account conversion from SAP to Oracle.

• Consolidated and managed annual budgetary processes.

• Implemented financial changes to existing inventory system (TRAX).

Atlantic Southeast Airlines (Delta Subsidiary) 03/99-10/05

Project Leader – Flight Operations 07/03-10/05

• Served as the company’s planning administrator in organizing, distributing, and analyzing budget data

for corporate goals and initiatives.

• Produced forecasting models for high-cost accounts (Fuel, Flight Ops Labor, and Maintenance).

• Fuel analysis – Burn rates, APU procedures, and aircraft taxi times.

Sr. Financial Analyst – Flight Operations 04/01-08/03

• Consolidated and reported month-end financial data.

6

• Managed and reported all divisional capital projects.

• Headed monthly forecast and year-end budget for the divisions in Pillar.

Financial Analyst – Financial Planning & Analysis 03/99-04/01

• Consolidated annual budgets for the divisions.

• Produced numerous month-end support reports to the operational leaders.

• Fixed asset management and reporting.

EDUCATION Augusta State University Graduated: December 1999

B.B.A. - Finance and Economics

SKILLS MS Office SAP Instructor Hyperion Pillar Instructor

Hyperion Enterprise Budget Analysis Hyperion Essbase Instructor

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