The Canadian government has issued Canada Jetlines (AU, Toronto Pearson) an official exemption from current foreign ownership caps approximately one month after Minister of Transport, Marc Garneau, announced the move.
In early November, Garneau said he would grant investment exemptions to both Jetlines and Enerjet (Calgary) thereby allowing foreign investors to own up to 49% foreign voting interests in either airline, with no single foreign investor or its affiliates having more than a 25% voting interest. Jetlines said its Exemption Order was granted for a five-year term ending on December 1, 2021.
As it stands, Jetlines is now poised to proceed with a reverse takeover of TSX Venture Exchange-listed firm, Jet Metal Corp. Once the transaction is complete, Jet Metal will be a publicly traded holding company through which Jetlines will carry out its business under a wholly-owned operating subsidiary named Canada Jetlines Operations Ltd.
Jetlines' argument for an ownership cap waiver was premised on the heavy costs start-up carriers incur during the certification phase of their operations. In its case, Jetlines said it would require CAD27 million (USD20.3 million) to satisfy Stage I (Financial Fitness) of its airline licensing process with the Canadian Transportation Agency (CTA).
Under its business plan, Jetlines will operate as an Ultra Low Cost Carrier (ULCC) offering extensive connectivity throughout Canada and into the United States. Fleet-wise, it has signed a definitive purchase agreement with Boeing (BOE, Washington National) to acquire up to twenty-one B737 MAX for delivery commencing in 2021. The agreement includes five firm orders for B737 MAX 7s, purchase rights for an additional sixteen B737 MAX, and some conversion rights to the B737 MAX 8 aircraft.
