VANCOUVER — Canada Jetlines is teaming up with a developing U.S.-based charter airline in an effort to recoup its losses.
The news comes less than two months after Canada Jetlines announced the resignation of its CEO and layoffs for almost its entire staff.
It’s also less than a month after the would-be ultra low-cost carrier filed a multimillion-dollar suit against several defendants including airline entrepreneur and WestJet co-founder David Neeleman.
Canada Jetlines says it has entered into a letter of intent with Delaware-based Global Crossing Airlines (GLOBALX) with respect to a business combination of Jetlines and GLOBALX.
Canada Jetlines says that in addition to the core business of GLOBALX – currently in the regulatory certification phase with plans to operate A320-200 aircraft – the combined entity will also continue with an operating plan for Canada, with charter operations in concert with major tour ops from Canadian gateways to major leisure destinations in the U.S. Flights would be branded as Jetlines, and operated by GLOBALX, on GLOBALX aircraft. The company would be renamed Global Crossing Airlines Group.
In a competitive field that already includes Air Canada Rouge, WestJet’s Swoop and Flair Airlines, and one that’s seen the demise of a long list of upstarts over the years, from Roots Air to Jetsgo to Greyhound Air, Canada Jetlines’ many attempts to launch as an ultra low-cost carrier seemed to screech to a halt in late October. At that time Jetlines announced it was laying off most of its employees except for a core team lead by the Executive Chairman Mark Morabito, who stayed on to continue meeting with investors trying to secure financing.
Now Morabito is stepping down too. “I am resigning from Jetlines at this time in order to facilitate the GLOBALX transaction and its plans to restructure management,” he said. “While Jetlines made significant progress in building out a management team, advancing the airline licensing process, establishing systems, securing routes and obtaining financing commitments, ultimately current market conditions necessitated a change in strategy. The GLOBALX plan preserves Jetlines strategy long term and provides a more immediate opportunity to commence airline operations.”
The statement from the company adds: “Jetlines has determined that the transaction [with GLOBALX] provides the best opportunity at the present time to maximize value for the company. The current intra-Canadian airline market is in a state of flux with consolidation ongoing at the major carriers, as well as at least three currently operating or planned market entrants in the Ultra-Low Cost Carrier segment. There is also no certainty regarding when the Canadian Competition Bureau will complete its investigation into WestJet and Swoop, or what the results of that investigation may be. The transaction provides Jetlines with an opportunity to fly cross border with support from strategic partners who can provide lift, crews, marketing, sales, and capitalization. It also preserves the longer-term opportunity to continue with an intra-Canadian airline operation.”
Last month Canada Jetlines filed suit against airline entrepreneur David Neeleman, DGN Corporation and Breeze Aviation Group, Inc., alleging the defendants “embarked upon a predatory scheme to destroy the relationships” between Jetlines, on one hand, and Jetlines’ then-CEO and a leading international investment bank on the other hand.
