Huntsman Post

Former Flying J Exec Talks of Going From Bankruptcy to Growth

By Steve Eaton

It was the type of phone call that can really put a damper on the holiday season.

Crystal Maggelet talks to students

Photo by Steve Eaton

Crystal Maggelet had just finished her Christmas shopping on Dec. 15, 2008, when she got a phone call that changed her life. She was told that the company that her father had founded, Flying J, was in “free fall bankruptcy.” In a normal bankruptcy, Crystal explained, there is time to plan and work out deals with vendors, creditors, and others. This was not the case for Flying J.

“Life, as I had known it, had just changed in a big, big, big way,” she said.

Crystal said the company had gone from having $4.3 billion in sales in 2000 to having $18.5 billion in sales in 2008. She had heard, at one point, that there were some cash flow issues, but she had no idea that bankruptcy was looming. In fact, at her suggestion, they had taken some of the top company executives on a luxury Mediterranean cruise in the fall of 2008 to celebrate the company’s success. She had come back from that cruise to be honored by the Jon M. Huntsman School of Business with a Distinguished Executive Alumnus Award, the highest honor given by the business school. At the time, Flying J was the 16th largest private company in the United States.

When Dean Douglas D. Anderson introduced Crystal as a Dean’s Convocation speaker in November 2011, he talked of those dark days for Flying J and said Crystal met the challenge so well that he predicted it would someday be written up as a business case study.

“If we had the opportunity to give Crystal another Distinguished Executive Alumnus Award, we would do so but, unlike the World Series, you can’t win it twice,” the dean said.

Crystal, who is now the president and chief executive officer of FJ Management, Inc., attended school at the Jon M. Huntsman School of Business for two years, but finished up her undergraduate education at Pepperdine University. She told the students she could remember attending classes in the winter, with wet hair frozen on her head, in the packed room where she was speaking. She said her time at USU were her most enjoyable college years.

She openly discussed how the company weathered the storm of bankruptcy, what caused it, and what she learned in the process. She talked about her father, Jay Call, who bought his first gas station in 1960 and opened the first Flying J truck stop in 1979. Her father never pushed her to become part of the family business; in fact, he wouldn’t let her work at Flying J as a teenager, so she ended up getting a job at McDonalds.

It was only after she had worked outside the Flying J business and earned an MBA at Harvard that her father approached her with a business proposition. He had an idea for a hotel in Salt Lake City. It was the beginning of the Crystal Inn hotel chain, which now has 11 locations in five states, that Crystal and her husband, Chuck, still own and operate.

Crystal talked of the death of her father in an airplane crash in 2003 and how it pushed her and her brother into leadership positions at Flying J.

“I was devastated by his death, and it was the worst thing that ever happened to me in my life,” she said.

When Flying J went bankrupt she was chairman of the board, but was unaware of some of the unusual challenges that had been facing the company in fall 2008. Part of what led to the company’s problems was that the price of oil went up and subsequently plummeted in the summer of 2008, and the company didn’t have a lot of finished oil, she said. Flying J was siphoning off cash from its healthy companies to temporarily subsidize the oil business. Even though the travel plazas were making a profit, the company was running out of cash. It was after Bank of America pulled the company’s credit line, that the Flying J had to file for bankruptcy. Then in January of 2009 that Phil Adams, the CEO, resigned and left the company, never to return.

“We had lost complete credibility with everybody - vendors, employees, banks, you name it,” Crystal said.

She said she started working 60-hour weeks traveling the country meeting with creditors and vendors and heard “heartbreaking stories” of the impact Flying J’s bankruptcy was having on other firms. Crystal said she remembers one call in particular where a very small business was going to have to declare bankruptcy because of Flying J’s woes, and all it needed to stay afloat was $1,000. Bankruptcy rules, however, would not allow her to give preferential treatment to one entity over another.

“It was horrible,” she said. “I hated those phone calls, because I felt so badly. And that’s when it became very clear to me that we were going to pay people back.”

One of the first things they did was sell off the companies that were not profitable. They sold their Longhorn Pipeline for $225 million. The company sold a business called Exploration and Production and the Bakersfield Refinery that Flying J owned. Crystal also agreed to a merger with Pilot that let the company keep a minority share of the Flying J travel plazas. They even sold off their $18 million company jet for $13 million. She said that they figured out that, based on the number of hours they used it, the airplane cost $35,000 an hour to fly.

On July 6, 2010, the company was out of bankruptcy after having paid 5,775 claims that came to almost $2 billion, Crystal said. It cost Flying J $80 million just to deal with the costs of administering a bankruptcy.

Flying J put together a five year projected budget in 2006 – 2007. The new company is estimating that, despite the bankruptcy, FJ Management, Inc., will be making as much money this year as had been originally projected five years ago, she said. The new company includes Big West Oil, TAB Bank, and a minority stake in Pilot Flying J. FJ Management is also partners with Pilot in owning half of TCH Transportation Clearing House, a credit card processing company.

Crystal told the students they needed to be willing to take on opportunities and challenges.

“If you don’t have confidence, no one else will believe in you either,” she said. “If you don’t believe you can do it, there’s no way you can.”

She advised the students to be tenacious, learn from their mistakes, not blame others for problems, and take responsibility for their lives. She said her father taught her the importance of integrity.

“When you say something you’d better mean it,” she said. “And you’d better live up to it, and you’d better be honest.”

To watch the Crystal Maggelet Dean's Convocation click here.