Canada Jetlines Ltd. (TSXV:JET) said it won’t be able to launch its service in June as its aircraft lessor could not provide a definitive delivery date
SmallCapPower | March 16, 2018: Canada Jetlines Ltd. (TSXV:JET), a Vancouver-based ultra-low-cost carrier, late Tuesday announced that it is unable to begin operations by June 2018, as previously announced, due to key items such as the completion of the licensing process, aircraft acquisition and completion of the financing process.
Canada Jetlines had secured aircraft under an LOI, but the aircraft lessor could not provide a definitive delivery date. The current market for leased aircraft has tightened substantially during 2017 and early 2018, driven by the engine manufacturing issues for the Airbus neo-powered aircraft, the increased demand for the Boeing freighter conversion program for Boeing 737-800s, world-wide traffic demand exceeding projections, etc.
To secure the aircrafts for starting operations as well as growth plans, Canada Jetlines is in advanced negotiations with various major aircraft lessors. The Company will provide new guidance to the market on its estimated commencement date once it has got definitive delivery dates for the aircrafts. Canada Jetlines hopes to provide an update regarding this in the second quarter of 2018. Meanwhile, Canada Jetlines continues to further its efforts with personnel recruitment, airport agreements, the licensing process and the financing plan.
Since its listing on the TSX Venture Exchange, Canada Jetlines has taken up several measures needed for starting operations, such as arrangements to offer services from John C. Munro Hamilton International Airport, Abbotsford International Airport and Halifax Stanfield International Airport with many more expected to be announced in Q2 2018; hiring several key executives required by Transport Canada including VP Flight Operations, VP Maintenance and Flight Attendant Manager in order to further the process of licensing; commencing trading on the OTCQB under ticker ‘JETMF’ that provides more access to U.S. investors, thereby leading to more access to necessary capital in order to begin commercial operations; appointment of Stan Gadek as Chief Executive Officer, who has extensive experience in the airline sector, being a former CEO of Sun Country Airlines and Senior Vice President Finance, Chief Financial Officer and Treasurer for NYSE-listed, AirTran Holdings.
Canada Jetlines currently has a market capitalization of $57.42 million with a price-to-book multiple of 16.98x. Following the announcement, the Company’s stock sank nearly 25% on the TSXV on Wednesday and lost an additional 19% in Thursday’s trading session. Canada Jetlines shares, however, should get a considerably lift once the Company launches its operations.
Disclosure: Neither the author nor his family own shares in the company mentioned above.
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