Canada Jetlines (AU, Toronto Pearson) says it has entered into definitive lease agreement with SmartLynx Airlines (6Y, Riga) for the lease of two A320-200s that will deliver by November 5 of this year as part of the carrier's AOC certification drive.
The start-up ULCC plans to launch commercial services on December 17, 2019 using Vancouver International as its home base.
The commitment came after Jetlines was able to align the terms of its escrow release conditions with both Smartlynx (for CAD7.5 million (USD5.57 million)) and South Korean fund, InHarv Partners (for CAD7 million (USD5.2 million)).
Under the revised terms with SmartLynx, CAD5.25 million (70%) of the proceeds shall be released once Jetlines meets its Funding Milestone by June 30. The milestone is calculated by adding the CAD3.85 million realised through the exercise of previously issued warrants since November 1, 2018, and the final amount committed under the InHarv financing at closing, and subtracting that total number from CAD40 million.
In addition, Jetlines must also secure the go-ahead from the Canada Transportation Agency (CTA) allowing it to sell tickets for airline travel. Jetlines intends to apply for this order in time to receive it in September 2019, approximately three months ahead of its first flight. The remaining CAD2.25 million (30%) of the proceeds will be released once Jetlines secures its AOC.
Under the revised terms with InHarv Partners, CAD4.9 million (70%) will be released once the CTA okays ticket sales and Jetlines has completed additional financings for gross proceeds of CAD33 million. The remaining CAD2.1 million (30%) will be released on the granting of its AOC.
