New low-cost Canadian airline delays launch over lack of investors

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Canada Jetlines Ltd. is postponing its planned December launch and laying off most employees after failing to secure $40 million in required financing and losing investment partners.

The company says the Dec. 17 startup of the ultra-low-cost airline will be delayed to an undisclosed date and it will not pay additional deposits to receive the first two Airbus 320 planes next month.

Jetlines says it couldn’t satisfy financing conditions in addition to funds committed by SmartLynx. As a result SmartLynx and InHarv ULCC Growth Fund have exercised their rights to terminate their investment commitments.

The company says it has been difficult to engage investors because they believe WestJet Airlines, which owns discount carrier Swoop, will “react very aggressively once the company starts operations, and in fact have already done so in anticipation of Jetlines’ entry into the market.”

As a consequence, it plans to reduce activities until the Competition Bureau finalizes its investigation into WestJet actions.

Canada Jetlines says a market analysis it retained has found evidence that Swoop is pricing significantly lower than other discount carriers and below avoidable costs on the routes identified by the Competition Bureau investigation.



Source

Business News

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