Canada Jetlines says that although it has made significant progress with respect to the airport agreements, commercial agreements and personnel additions required to launch operations, as well as securing funding of up to $29 million, it plans to launch commercial service on December 17, 2019 using Vancouver (YVR) as its home airport.
As a result of this delay, Jetlines and AerCap have mutually agreed to terminate the leases for two A320 aircraft, and Jetlines has entered into a letter of intent with its partner, SmartLynx Airlines SIA, for the lease of two alternate Airbus A320 that will be available for delivery in Q4 2019 in line with the expected commencement of Jetlines’ operations. The two aircraft will have the same configuration as the AerCap aircraft, with 180 ACRO seats. The letter of intent (LOI) is subject to executing a definitive lease agreement and other conditions customary to a transaction of this nature.
Executive Chairman, Mark Morabito commented: “I am pleased with the Jetlines strategy of launching for the winter peak, in time for the holidays. The leased aircraft are on favorable terms as a result of our partnership with SmartLynx and this decision is expected to help Jetlines deliver better results than originally anticipated. In addition to our financing announcements with SmartLynx and InHarv, the company continues to work with other groups in effort to secure the rest of the capital required for our start-up.”
Meanwhile, Canada Jetlines has entered into a LOI with a Korean special purpose fund led and established by InHarv Partners for a financing of up to $14 million. InHarv is a hybrid of venture capital and private equity based in Seoul, South Korea whose strategic stance is to raise capital in South Korea for investment in start-ups overseas. InHarv will be acting as lead & general partner for the Korean special purpose fund, and also investing as principal. The Korean special purpose fund includes the investment divisions of a number of Korean manufacturing and financial institutions as its group of limited partners. A special purpose vehicle (SPV) will be created by InHarv to facilitate the investment into Jetlines.
“This financing transaction with the Korean SPV Fund is an important pillar of Jetlines’ financing plan. Combined with the SmartLynx financing completed at the end of 2018 and $8.8m in proceeds received through the exercise of previously issued share purchase warrants, Jetlines has raised a significant portion of the funds that it needs to launch airline operations. We intend to raise the balance of the proceeds through additional debt and equity financings in the near term and negotiations are well advanced in this regard,” said Morabito.
Javier Suarez, CEO of Jetlines added: “There is significant penetration of ULCC airlines in South Korea. They understand the value proposition associated with these types of airlines and the returns Korean local investors have obtained investing in these airlines. The extensive due diligence that the Korean SVP Fund have conducted to date provides further validation of the need for a true ULCC in Canada and Jetlines’ business plan.”