Inovent Capital (Inovent) and Canada Jetlines (Jetlines) have jointly filed a preliminary long form prospectus with the securities regulatory authorities in Canada for an initial public offering that will finance a new start up airline.
Jetlines is a private aviation company with an overall business plan to commence domestic scheduled point-to-point air service in mid-2015 from a base at the Vancouver International Airport. Jetlines will apply an ultra-low cost operating model that focuses on generating new passenger demand from what its management believes is currently an unserved market of price sensitive customers in Canada. Jetlines intends to select routes which avoid direct competition with currently operating airlines (where possible) and focus on cost discipline in order to keep operating costs low.
“We’re very excited about, hopefully in the second quarter of 2015, bringing affordable airfares to Canadians,” said Canada Jetlines president David Solloway.
The offering, which is being led by AltaCorp Capital and Euro Pacific Canada, will provide the main financing for the airline, which hopes to raise $50 million.
Jetlines hopes to begin flying by mid-2015.
Meanwhile, oil price have crashed to a new four-year low, below $72 per barrel. A split inside Organization of Petroleum Exporting Countries (OPEC) has forced the cartel to hold production at current levels. Brent crude oil is expected to fall below $65 and could go as low as $60.
Prices have been falling thanks to increased US shale production and faltering demand as growth slows in China, Europe and emerging markets. Saudi Arabia voted to hold prices as they are in a bid to halt fracking production in the US which becomes uneconomical at lower oil prices. There are reports that Venezuela was very unhappy with the decision by OPEC which is desperate for output cuts to help boost income. Airline shares have reacted well to the news, with Jet Airways up 9.99% to Rs 295.10 and SpiceJet up 4.8% to Rs 16.15.