Canada Jetlines: Its Turn To Fly

Jul. 18, 2019 2:49 PM ETCanada Jetlines Ltd. (JETMF)7 Comments
Sherif Samy profile picture
Sherif Samy
1.27K Followers

Summary

  • Canada Jetlines has secured new financing partners: InHarv and Smartlynx.
  • Its technology (its key piece to keep costs low) appears ready for implementation.
  • December 2019 launch date is likely a go.
  • It could be a potential disruptor in the industry.

Jetlines Logo

Since my last article on Canada Jetlines (OTCQB:JETMF) back in Nov. 2018, the Canadian airline industry has changed quite a bit. From the privatization of WestJet (OTC:WJAFF) by Onex (OTCPK:ONEXF) to the acquisition of Air Transat by Air Canada (OTCQX:ACDVF), the Canadian airline industry continues to evolve. Regardless of how things shake out for the airline industry, I believe Jetlines has the potential to disrupt the industry.

Although Jetlines continues to burn cash and has yet to fly its first plane, I believe the airline's pivot towards technology will make it a formidable player in the industry, and this will help drive profitability when Jetlines launches in late 2019.

Jetlines Advantage: Technology to Drive Costs Down

Two major expenses in any airline are its fuel costs and salaries/benefits. Aircraft fuel is a necessary expense and one way to mitigate this is to fly fuel-efficient airplanes. With salaries and benefits, too high of a salary for its employees can erode an airline's profit margins. This is one major reason why Westjet was very much against its employees unionizing.

For Jetlines, in a bid to lower its cost structure, it is leaning heavily on the latest technology to help drive costs down. Below is a slide from its investor presentation:

(Source: Jetlines Investor Presentation)

It's investing heavily in its e-commerce platform and already it has confirmed the following systems are ready for launch:

  • Jetlines has integrated several commercial systems including its booking engine, payment processing, revenue management system
  • Its reservation platform will allow it to book car rentals and hotels
  • The airline has successfully integrated its website with the reservation system platform, Radixx
  • In partnership with Elavon, Jetlines booking platform can now handle CDN and USD
  • In working with Adyen, payments can now be made through mobile, Jetlines website, and through e-commerce

This article was written by

Sherif Samy profile picture
1.27K Followers
I studied Economics and Accounting at Wilfrid Laurier University, and I have earned designations in Certified Management Accounting (CMA CPA) and Certified Alternative Investment Analysts (CAIA).  I typically look for companies with above average dividend yields, under valued companies, or struggling companies with turn around potential.

Disclosure: I am/we are long JETMF. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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