Waltzing Matilda Aviation (MW, New Bedford) – the parent of nascent scheduled brand Connect Airlines – plans aggressive fleet growth in the first decade of operation, from five DHC-8-Q400s to 500 hydrogen-powered electrical turboprops, including 400 new Avions de Transport Régional ATR72Es, regulatory filings reveal.

This is according to supporting documents in a May 17 response by Waltzing Matilda Aviation (WMA) to the US Department of Transportation (DOT), yet again clarifying that the company is majority US-owned. WMA is a Boston-based FAA Part 135 charter specialist which entered Phase Four of the five-stage certification process more than three months ago and hoped to debut in 2Q22.

Correspondence between the carrier and the DOT over its applications for Part 121 scheduled passenger services has continued since December 2020. The DOT is questioning whether WMA is a citizen of the United States, whether the capital it has raised comes from US investors, and whether it can raise the money necessary to fund its plans.

Supporting documents reveal its ambitious fleet growth plans to be as follows:

  • WMA has entered lease agreements for five DHC-8-Q400s, the first two leased from Chorus Aviation have already been delivered; the rest are to be leased from Nordic Aviation Capital. These will be used to launch operation in 2Q22 in key yield US East Coast connecting hubs;
  • MWA has already paid just over USD2 million in aircraft deposit;
  • It will lease additional aircraft from similar, well-respected aircraft lessors;
  • It plans to lease all of its aircraft during the initial years of operation;
  • Next, it intends to acquire a fleet of 15 test-bed hydrogen-powered electric DHC-8-300s;
  • Acquisition and subsequent conversion of 100 used Dash-8-Q400s;
  • Delivery of 400 new ATR72Es at six aircraft per month;
  • A fleet of hydrogen-powered turboprops within ten years, to be deployed on high-yield short-haul segments.

In support of its vision to become the first emission-free airline in the US, WMA has invested USD50,000 in startup Universal Hydrogen, which has made a reciprocal USD50,000 investment in the airline.

WMA has also entered an agreement for a convertible promissory note with UK special investment vehicle, TransAir, for up to USD5 million funding in five tranches. TransAir is owned by UK investor Richard McAlpine.

The first tranche of USD1 million was provided on April 29, 2022. Subsequent two tranches of USD1 million each are conditional on the DOT preliminarily approving WMA's applications, and another two USD1 million tranches depend on WMA's receipt of its Part 121 certificate. The notes are convertible into preferred equity, but TransAir will have no voting right in WMA.

As things stand, MWA was capitalised to the tune of USD8 million in May 2021, followed by USD1.850 million from individual "simple agreements for future equity" (SAFE) investors in January 2022. A second capital raise of USD35 million through Raymond James investment bank is underway, with a planned close and receipt of funds in July 2022. Another capital raise is planned for 2025.

WMA founders John Thomas and spouse Paula Vanderhorst have contributed USD800,000 initial seed money from WMA's cash flows from its existing Part 135 operation. They also loaned the company an additional USD2 million and pledged more than USD9 million from their own funds.

The DOT has queried minority interest consent rights that would give a foreign investor the ability to control the airline. WMA, in response, said that while the first investment round was funded primarily by UK investor Richard McAlpine and investment funds affiliated with him, he received only a minority, non-voting stake in WMA. "McAlpine did not receive any special approval rights, does not have the authority to appoint a representative to WMA’s advisory board, and currently does not have a designated representative on the WMA advisory board. His non-voting ownership interest of 20.4% falls well within the acceptable limits of foreign ownership previously approved by the Department," WMA stated.