Canada Jetlines LOI to combine with GLOBALX
December 16, 2019 By Wings Staff
Canada Jetlines Ltd. on November 13 announced it has entered into a Letter of Intent with Global Crossing Airlines (GLOBALX), a developing U.S. charter airline that is financially backed by two Miami based private-equity firms, to combine their operations under a new entity called Global Crossing Airlines Group.
Jetlines planned to begin operating as an Ultra Low Cost Carrier out of Vancouver International Airport this December after a year of raising funds and establishing network routes. Jetlines is part of the King & Bay group of companies, a merchant bank.
With its head office at Miami International Airport, GLOBALX states it is the pre-revenue stage of development with plans to operate its charter airline with the Airbus A320-200 aircraft. GLOBALX explains its business model includes the intention to provide ACMI and wet lease contracts to airlines operating within and to the United States; and to develop aircraft interchange with European charter/tour operators.
Under terms of the LOI, Jetlines shareholders would hold 49 per cent of the common and variable voting shares of the new Global Crossing Airlines Group (GCAG). Shareholders of GLOBALX will hold 51 per cent of GCAG. The combined entity intends to continue with an operating plan for Canada. This includes plans to initially operate charter operations in concert with major tour operators from Canadian cities to leisure destinations in the United States. It is intended that GLOBALX aircraft will be used to operate these flights – branded as Jetlines, operated by GLOBALX.
Jetlines notes this transaction provides the best opportunity to maximize value for the company, pointing to how the current Canadian airline market is in a state of flux with ongoing consolidation at the major carriers, as well as at least three currently operating or planned market entrants in the Ultra-Low Cost Carrier segment.
“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,” said Mark Morabito, executive chairman of Jetlines. “The GLOBALX plan preserves Jetlines strategy long term and provides a more immediate opportunity to commence airline operations. I am resigning from Jetlines at this time in order to facilitate the GLOBALX transaction and its plans to restructure management.”
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