Canada Jetlines (AU, Toronto Pearson) Chief Executive Officer (CEO), Jim Scott, has warned its investors that unless the Canadian government makes a decision soon concerning the start-up's application for foreign investment cap exemption, the project may be forced to close down.
Since May, Jetlines has been lobbying the Canadian Ministry of Transport to exempt it from a current 25% cap on foreign ownership. It claims it has several international investors that specialize in supporting Ultra Low Cost Carriers (ULCC) that are willing to invest in the company albeit in return for as much as a 49% shareholding. The start-up requires the added investment in order to raise the CAD27 million (USD20.9 million) it needs to satisfy Stage I (Financial Fitness) of its airline licensing process with the Canadian Transportation Agency (CTA).
However, although the CTA has been conducting public consultations on the matter, a memo issued this week to Jetlines investors and seen by the Winnipeg Free Press said no decision had yet been taken.
"However, unless an exemption order is granted and a clear timeline provided by the minister in the coming weeks, this opportunity will simply be lost," Scott wrote. "Neither Jetlines nor its investment partners are in a position to wait for an overall policy change."
The contentious decision has garnered resistance from local indigenous tribes and although Air Canada (AC, Montréal Trudeau) and WestJet (WS, Calgary) have come out in favour of increasing foreign ownership caps, they have rejected awarding it on an exceptional basis.
The outcome will also affect Enerjet (Calgary) which applied for ownership exemption for its proposed LCC unit FlyToo (Calgary) in August.
Under its original plans, Jetlines initially intended to lease three B737-300s from GECAS for use on domestic Canadian flights. It also has a tentative order with Boeing (BOE, Washington National) for five B737 MAX 7s with purchase rights for an additional sixteen B737 MAXs and 'some' conversion rights to the B737 MAX 8 aircraft. Deliveries are scheduled to commence in 2021.
