Signaling another milestone in the ongoing recovery of AirCal, the directors of the Newport Beach-based airline on Monday elected David Banmiller to succeed William Lyon as the company’s president and chief operating officer. Lyon has said in the past that he would step down as AirCal president when he believed the airline had regained financial health.
Lyon, a major Southland homebuilder and 35% shareholder in AirCal, said he intends to remain as AirCal’s chairman and chief executive for an indefinite period but hopes eventually to pass along the chief executive title to Banmiller, who Monday was also elected to the board of directors.
Banmiller’s promotion, Lyon said, was in recognition of the pivotal role he has played in improving the financial fortunes of the airline.
In his most recent position as senior vice president of marketing, Banmiller, 40, was credited with creating numerous successful promotional campaigns. No one as yet has been appointed to replace Banmiller in the marketing job.
Paul Plaettner, senior analyst at Los Angeles-based Crowell Weedon & Co., said Banmiller actually has been handling day-to-day affairs at AirCal for some time under Lyon’s watchful eye. Banmiller’s new title, Plaettner said, is “well deserved” and will help him conduct business with other companies in the airline industry.
Banmiller’s strategy, Plaettner said, has been to “upgrade the airline’s service” with such conveniences as wider seats and greater legroom, and then to create “advertising campaigns that trade on the upgrade.” His consumer-oriented approach has proven so effective that some people in the airline industry have begun to refer to Banmiller as AirCal’s “secret weapon,” Plaettner said.
Lyon Took Over in ’82
Lyon and George Argyros, a Santa Ana developer and owner of the Seattle Mariners baseball team, bought AirCal in 1981 and took the company public in 1983. Lyon seized control as president and chief executive officer in December, 1982, when the airline was suffering severe losses. His goal, he said, was to guide the airline through the rough times and then step down.
Last July, Banmiller was named senior vice president of marketing and assistant to the president. It was then, Lyon said Monday, that he began grooming Banmiller to take over the president’s post.
A 19-year veteran of the airline business, Banmiller was employed for 12 years at Trans World Airlines before coming to AirCal in 1978 as director of station services. He was promoted to assistant vice president in 1980, was named vice president of passenger services in 1981 and was appointed vice president of marketing and business planning in December, 1982.
Banmiller said he expects airline industry competition will intensify in response to deregulation. “I think that those who are more aggressive and entrepreneurial at evaluating the marketplace have a better chance at profiting from their efforts,” he said.
Lyon and Banmiller emphasized that they have no plans to change the management organization at AirCal or to alter the airline’s policy of expanding its presence in the western coastal corridor.
Policies Produce Profits
In recent years, AirCal, once known primarily as an Orange County airline, has greatly expanded its operations at other airports, including Los Angeles International. Most recently, AirCal announced that as of June 1 it will begin offering service to Vancouver, B.C.
AirCal’s policies have paid off in rising profits. For the first quarter of 1985, the airline reported that it earned $2 million, a 147% increase over the $828,000 profit posted the same quarter last year.
AirCal ended 1984 with a profit of $8.5 million, but posted losses of $35.6 million in 1982 and $2.93 million in 1983, when its employees received 10% wage cuts. Early last month, in a mood of celebration, the company distributed $11.6 million to its employees to begin fulfilling its promise to reimburse their salary losses when business revived.
In March, the airline raised about $32 million from the sale of convertible preferred stock which it used to help retire long-term debt remaining from Lyon’s and Argyros’ leveraged buy-out of the company.
John Pincavage, an analyst with New York-based Paine Webber, predicted that before 1985 is over, AirCal’s shareholder equity will grow to $90 million from $36 million at the end of 1984 and that the airline’s long-term debt will shrink to $35 million from $96 million.