A Lcc Bites The Dust In Canada

[FrugalFlyerv2.0]

From the Toronto Star
______________

Fri. Mar. 11, 2005. | Updated at 08:25 AM
Mar. 11, 2005. 07:40 AM


Grounded Jetsgo strands passengers
Westjet offers help after Jetsgo ceases operations, tells travellers to make other plans

Discount airline Jetsgo announced early today that it is grounded, effective immediately.
Jetsgo advised customers to make alternative arrangements before heading to Pearson International Airport this morning because there will be no Jetsgo staff or planes available.

REMAINDER DELETED: POST THE LINK.


link

 

[FrugalFlyerv2.0]

Here's some comments:

1) I think this is the case where the carrier (Jetsgo) was threatening to "JUMP" while AC and Westjet pushed it over the ledge / encouraged it to jump. Cheap fares and bad service is not a winning formula, especially when AC can duplicate the fares & (bad) service and Westjet can improve on service while presenting a competitive price.

2) Never had the pleasure of using Jetsgo, but I do recall they were advertising one-way fares in certain markets of $20.04 (or $20.05) to celebrate the new year. Even the bus companies were worried. Although the price was good, the thought of sitting in a F100 with >100 seats discouraged me from using Jetsgo.

3) These ultra low fares that Jetsgo was offerring is sort of what I saw FlyI doing this past summer. There were some fares/seats this summer on FlyI between IAD and DTW that were almost the same as driving (I think the difference was ~$20 when the gas and tolls are added up).

4) Mr. Leblanc has done a great job running airlines. He suckered Canada3000 into purchasing Royal Aviation. By suckered I mean that I read stories where Royal's condition / finances were made to look better than they were. I believe there may have been some lawsuit(s) regarding this - but can't recall the outcome. C3K would have been better off to let Royal die on its own, instead of buying the company that greatly contributed to its financial problems and eventual demise.

 

[BillLumbergh]

Another article:

http://www.cnn.com/2005/WORLD/americas/03/...reut/index.html

 

[SVQLBA]

I saw a report where LeBlanc said it was one of the creditors who put them in a cash crunch (i.e., presumably demanded accelerated payment in debt or something similar). I'd be interested to knwo who the creditor was, because I'm sure there are som U, UA, DL, FLYi creditors that are on the verge of losing patience also.

 

[whlinder]

Were there any indications of an imminent shut down, or a deadline for financing agreements or anything? Or did they just say 'Today feels like a good day to shut down'?

 

[FrugalFlyerv2.0]

Were there any indications of an imminent shut down, or a deadline for financing agreements or anything? Or did they just say 'Today feels like a good day to shut down'?

[post="254760"][/post]​

Here is what I was able to find.
In short, it wasn't unexpected, but just not expected that soon?

According to Jetsgo, it wasn't their fault - Westjet is to blame for their collapse:
"Montreal — Jetsgo Corp., the discount airline that halted flights Friday and is seeking court protection from creditors, blamed much of its current woes on rival WestJet Airlines Ltd."

see story: 'not my fault'

Also, it seems that AC sort or expected it:
"Air Canada, fresh off its first fourth-quarter profit since 1999, says it plans to broaden its lucrative international routes and is poised to expand within Canada if discount airline Jetsgo Corp. falters."

see story: AC to expand if jetsgo fails

The company also had some problems with Transport Canada
story 1: near miss investigation
story 2: Transport Canada Restrictions

 

[FrugalFlyerv2.0]

Were there any indications of an imminent shut down, or a deadline for financing agreements or anything? Or did they just say 'Today feels like a good day to shut down'?

[post="254760"][/post]​

Here's some tidbits from today's Toronto Star:

1) "Within minutes of Riar being handed the memo, a scene from a Hollywood thriller unfolded. White Ford Broncos from the Greater Toronto Airports Authority zoomed onto the tarmac, encircling his jet and others in the Jetsgo fleet. The company, as it was doing at airports across Canada, was safeguarding its biggest assets, 14 Boeing MD-83 and 15 Fokker 100 jets, an aging fleet of leased and purchased planes."
"Within 10 minutes of Flight 481 touching down at Pearson, the airports authority employees were locking Jetsgo staffers out of the airport's sensitive areas. Riar, like other Jetsgo pilots on that final night, wasn't even allowed to file what would be the airline's last log sheets and in-flight reports."

2) "Jetsgo — his fourth airline attempt and 90 per cent owned by Leblanc — was burning money as fast as his aging jet fleet guzzled gas. Court filings show that the company, which had eked out a profit of just $781,000 in the fiscal year ending 2003, lost an estimated $22 million last January and February trying to stay aloft. Things looked even bleaker in the six months ending Dec. 26, 2004, when Jetsgo lost close to $33.8 million. But when one of the creditors moved on the airline, Leblanc admits, he'd run out of options."

3) "Jet fuel prices had been soaring, due to the instability a half-world away in the Middle East. That had made the discount airline's bargain-basement fares — as low as $1, which had other airlines questioning his operation — even more difficult to sustain."


Full story: Slow March to Jetsgo's Sudden Death

 

[FrugalFlyerv2.0]

Article in The Globe and Mail (3/15/05): Jetsgo sent jets to Quebec for safe haven from creditors

" A financially imperilled Jetsgo Corp. sent the bulk of its fleet of 15 Fokker 100s to Quebec City last Thursday night in a calculated effort to protect its prized assets from creditors.

Jetsgo pilots had been told to refuel and fly to Quebec City for "air worthiness" checks on parts, including engine thrust reversers, The Globe and Mail has learned. A Transport Canada official said no maintenance checks were ordered and airport and aircraft industry officials added that Jetsgo ultimately wanted to ensure an orderly return of its company-owned aircraft.

Four hours before Montreal-based Jetsgo announced its shutdown at around midnight Thursday, the discount carrier started transferring the Fokkers to its Quebec City hangar, keeping the planes away from creditors, such as authorities at Toronto's Pearson International Airport."

Full story here: Jtesgo sent F-100 to Quebec

 

[FrugalFlyerv2.0]

More on Jetsgo:

1) Toronto Star
"Jetsgo dangles paycheques as bait
Memo orders ex-workers to give back parking passes, cells to company if they want to be paid"

paycheques as bait

Toronto Star
2) "OTTAWA—He knew there was the possibility of trouble at Jetsgo. He'd gone so far as to call Air Canada. But could he have dealt with it more effectively, say by calling Jetsgo at the first hint of trouble to try to avoid continued ticket sales and flights with passengers who would be stranded?"

Did it have to be this messy?

The Globe and Mail
"Jetsgo Corp. founder Michel Leblanc met with accountants and lawyers at Montreal law firm Ogilvy Renault LLP last Wednesday in a last-ditch attempt to save the discount airline."

'the plan'

 

[FrugalFlyerv2.0]

From today's Toronto Star: Leblanc speaks:

""If somebody's not doing their job in Ottawa, it's the Competition Bureau," says Leblanc, calling for an investigation of "predatory pricing" and what he fears will be price gouging by WestJet and Air Canada now that the really low-fare competitor is gone.

"I don't mind fair competition. I can take that. I certainly didn't factor into my business plan spying and lying and gossiping. I don't think we should have."

There are many in the industry, however, who put most of the blame squarely on Leblanc's shoulders, saying aged aircraft, coupled with too rapid expansion, a flawed business plan and a lack of respect for his strong competition doomed Jetsgo almost from the start."



Full story here: link