Canada Jetlines

Canada Jetlines postpones launch, lays off most staff

An artist’s rendition of a Canada Jetlines Airbus A320 (photo: Canada Jetlines).

Major financiers have backed out and Canadian airline hopeful Canada Jetlines has grounded its plans to launch low-cost operations and will lay off most of its staff.

The company made the announcement Monday after stock markets had closed for the day. It also announced the resignation of Chief Executive Officer Javier Suarez, who was brought in just last year to get the fledgling airline off the ground after successful stints at Vueling and Viva Aerobus.

Jetlines had hoped to launch service December 17, in time for the Christmas rush, but investors and partners SmartLynx and InHarv ULCC Growth Fund pulled the plug when executives were not able to secure $40 million in additional funding.

The company had hoped to receive its first two Airbus A320 aircraft in November, though those plans have been put on hold with no restart on the horizon.

“One of the principal concerns encountered by Jetlines team while engaging with investors,” said the company in a release, “is that they believe the existing dominant members of Canada’s aviation duopoly will react very aggressively once the company starts operations, and in fact have already done so in anticipation of Jetlines entry into the market.”

Specifically, Jetlines executives blamed Westjet subsidiary Swoop for undercutting competition and pricing flights below cost.

“Qualitative analysis of changes in service illustrates Swoop / WestJet’s rapid increase in capacity beyond what economic sense might dictate,” the company said.

The company has complained to the Competition Bureau but could not wait for a decision before pulling the plug.

“It is very unfortunate that we have to postpone our launch date,” said Executive Chairman Mark Morabito. “We have built as much as anybody can without access to more capital. We have invested in bringing on board the most talented people who have done an incredible job putting together our operations manuals and systems, our brand, website and all other commercial components needed for launch.”

Jetlines said contracts for airline systems and airport access have been put on hold. The airline has submitted manuals to Transport Canada to get an Air Operators Certificate. Those documents will be kept and updated should the company ever secure enough financing to launch operations.

The Jetlines board will search for a new CEO who will lead a skeleton staff aimed at securing new investment.

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