Canada Jetlines (AU, Toronto Pearson) has announced it will effect drastic job cuts after two key financiers pulled funding resulting in the carrier further delaying its proposed December launch plans.
Jetlines said in a stock market filing that Latvian ACMI/charter specialist SmartLynx Airlines (6Y, Riga) and South Korea's InHarv ULCC Growth Fund had withdrawn their backing after they expressed scepticism that the nascent ultra-low-cost-carrier (ULCC) could break the dominance of Air Canada rouge (RV, Toronto Pearson) and Swoop (Hamilton, ON) in Canada's low-cost market.
"SmartLynx and InHarv ULCC Growth Fund have exercised their rights to terminate their investment commitments," it said. "The December 17, 2019 launch date will need to be postponed and the Company will not pay additional deposits and will therefore not receive their first two Airbus A320-200s it has planned to receive in November this year. No further date will be announced until funding is secured. One of the principal concerns encountered by the Jetlines team while engaging with investors 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."
Given their withdrawal, Jetlines has been forced to lay off "most" employees except for a core team lead by Executive Chairman Mark Morabito who will continue meeting with investors in an effort to try to secure financing. Jetlines’ CEO, Javier Suarez, has resigned while Zygimantas Surintas has also tendered his resignation as a director.
Most airline systems contracts have been suspended and will only be reactivated once Jetlines is ready to launch. Similarly, all the manuals that have been submitted to Transport Canada as part of the start-up's quest for an Air Operator's Certificate (AOC) will be kept and updated as required.
“It is very unfortunate that we have to postpone our launch date. 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," Morabito said.
