Announcing plans to delay launching flights has prompted shares of Canada Jetlines Ltd. (TSX-V:JET) to plunge 38.7%, since closing at $1.42 on March 13. That includes an 18.7% drop on March 15, to $0.87.
The aspiring ultra-low-cost carrier (ULCC) revealed in a March 13 news release that “it will not attain a June 2018 start-up date as previously projected.”
Trouble obtaining aircraft prompted the delay.
The airline planned to lease two used Boeing 737 planes but attempts to secure those aircraft fell through.
Jetlines is now in “advanced negotiations with several major aircraft lessors to secure the aircraft required to support both its start-up and growth plans,” it noted in the release.
(Chart: Canada Jetlines shares hit a high of $1.42 at the end of trading on March 13 but have fallen 38.7% since then, to $0.87 at the close of trading on March 15.)
The airline explained that the current market for leased aircraft is considerably tighter than it was in early 2017.
“Increased demand and decreased supply of used aircraft available for lease” was the main reason the airline failed to secure needed planes, it noted.
Jetlines has been readying to launch for about five years and former president David Solloway told Business in Vancouver in 2014 that the intent was to have planes in the air by 2016.
Jetlines did not say when it plans to launch, only that a launch is still planned. It is expected to announce a new launch date in the spring or early summer.
Canadians had been expecting brisk competition among new ultra-low-cost carriers this summer given that WestJet Airlines Ltd. (TSX:WJA) plans to launch flights for its new subsidiary named Swoop on June 20.
Both Jetlines and Swoop are expected to be similar to service offered by the new Flair Airlines, which also bills itself as a ULCC and expanded its route network to seven cities including Vancouver International Airport, in December.
