The new Canadian start-up airline Canada Jetlines has recently turned in its full year 2022 annual financial results.
Having commenced operations in September 2022, here is a broad overview of the new airline’s timeline and performance to date.
September 2022 start-up
Having only commenced operating scheduled flights from September 22, 2022 this represents the Company’s first published operating revenues.
Given the timing of the new airline start-up, coming close after the global aviation market was recovering from the after-effects of an extended pandemic, there was much speculation with respect to performance and longevity.
So how has the fledging airline fared so far?
2022 financials
During the first reporting period, the Company operated charters and ACMI (Aircraft, Crew, Maintenance, and Insurance) flights generating $2.4 million, representing 72% of the total revenue for the year.
Total operating expenses of $15,940,511 million for the 2022 fiscal year increased from $3,392,470 compared to 2021.
Increases were primarily driven by the airline commencing air service operations, as well as adding an additional aircraft during the year.
Total assets increased to $27,289,573 from $5,236,914 as at December 31, 2021. The increase in total assets compared to 2021 is primarily attributable to the capitalization of right of use assets associated with aircraft leases and increase in property and equipment.
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Total liabilities increased to $28,948,171 from $1,068,599 as at December 31, 2021. The increase was made up of the liabilities associated with the two aircraft leases and increases in accounts payable and accrued liabilities explained by the timing of payments and invoices received at the end of the period.
2022 in retrospect
Speaking on the 2022 performance in review, Eddy Doyle, CEO of Canada Jetlines commented: “We are pleased to report that several key milestones were achieved in 2022 that allowed Canada Jetlines to get airborne.”
“In March 2022, Canada Jetlines received determination of Canadian ownership and control by the CTA (Canadian Transportation Agency).”
“In the month of May 2022 the CTA concluded that the company had sufficient funds to meet the CTA requirements to issue its commercial license once the Air Operator Certificate (AOC) would be issued by Transport Canada.”
Mr. Doyle continued: “During all of 2022, Canada Jetlines worked assiduously towards the goal of completing the extensive process of obtaining its AOC for commercial large aircraft operations and taking possession of its first Airbus 320 aircraft.”
Having received its Canadian operating approvals, the airline flew its first revenue flight from Toronto to Calgary in September 2022.
The carrier gained a further key approval in December 2022 when the US Federal Aviation Administration (FAA) granted authority to operate and fly to and from the United States.
Mr Doyle notes: “Canada Jetlines was able to meet all the FAA and Department of Homeland Security requirements in record time and was granted such rights before the end of 2022.”
The airline also entered the ad hoc charter market in addition to its scheduled operations towards the end of last year.
“In November 2022 the Company completed its first charter flight and several ACMI flights for other carriers,” said Mr Doyle,
The charter component of the business grew rapidly in December 2022 and the end of the year also saw entry into service of a second aircraft.
2023 Update
Speaking on developments for the airline in the current year, Mr Doyle observed:
“In February 2023, the Company was proud to introduce Las Vegas as its first international scheduled destination, this was followed in March with a new route from Toronto to Cancun, Mexico.”
“Charter flights and ACMI lease contracts continued to grow throughout the first quarter of 2023 and in March the Company announced it was chosen to provide an aircraft and crew for a 5-month ACMI contract beginning at the end of March, 2023.”
Codeshare agreement
In March, Canada Jetlines announced it was in discussion with Qatar Airways for a potential codeshare agreement where Canada Jetlines would provide service between Toronto and Doha.
This would be subject to government approval and completing all applicable agreements between the two airlines.
This agreement would potentially offer Canadian travelers access to Qatar Airways’ unparalleled network via Doha to destinations in the Middle East, Africa, Indian Subcontinent and across Asia.
Canada Jetlines intends to add two or more additional aircraft to its fleet in 2023 and continue to grow its schedule and Charter/ACMI business.
Summary
The Company ended the year with $3.1 million in current assets, a decrease of $1 million compared to year end 2021. The decrease is mainly due to the drop in cash balance that was used for operating expenses.
Current liabilities increased from $821K in 2021 to $8.2 million, mainly due to an increase of $4.1 million in leased aircraft liabilities as the Company grew its fleet from zero aircraft in 2021 to two aircraft by December 2022.
In addition, there is $761K in the current portion of a loan payable, $2.2 million of ground handling and other liabilities associated with the addition of two leased aircraft.
Based on the Company’s working capital position, the Company will need to raise additional capital during the next twelve months and beyond to support its business plan.
The Company is seeking additional capital in the form of debt, convertible debt or equity in order to further invest in the business and facilitate the continued growth of the fleet, including the acquisition of additional leased aircraft, as well as additional working capital.
