Jetmagic titsup

dahamsta

JETMAGIC SUSPENDS OPERATIONS

Cork based regional airline, Jetmagic, announced the suspension of its operations with immediate effect this evening (Wednesday, January 28, 2004). On the recommendation of the Board of Directors, flight operations have been suspended and an Extraordinary General Meeting of shareholders will be convened to consider winding up the company.

In a statement Jetmagic said it was a matter of deep regret for shareholders, directors, employees and supporters of the project that despite wide acclaim, Jetmagic had not proved to be a viable operation. Expected passenger demand did not materialise, especially in terms of business travel. In the case of a number of routes – including Brussels, Rome and Milan - the company had already announced that they had been, or would be, discontinued. The decision by competitors to introduce flights to some of Jetmagic’s most successful destinations had also impacted on the company’s business forecast for 2004.

The company enjoyed high passenger loads on a number of routes – particularly those to ‘holiday’ destinations, including Alicante, Barcelona, Nice, Nantes and Milan. However, there were very disappointing bookings on business routes - Brussels, London City, Edinburgh, Liverpool and Paris - with only Belfast City achieving satisfactory levels.

Jetmagic’s shareholders invested some €10 million in the airline which started operations from Cork last spring, including investments made by existing shareholders In the past month. There were a number of expressions of interest from third parties, based on a revised three year operating plan. However the short term financial requirements of keeping the business going proved insurmountable, the statement said, and the Board had no other option but to suspend operations.

The appropriate Authorities have been informed of the position and their assistance sought in the matter of an orderly wind-down with minimal impact on the airline’s customers. A formal meeting of creditors is being arranged.

Passengers booked to travel with Jetmagic are advised to make their own alternative arrangements with other airlines. Those who have paid for their Jetmagic flights by credit card should contact the card issuer who should arrange for a refund. Passengers who have taken out travel insurance should contact their insurer. If they have paid by a means other than by credit card and they have not taken out travel insurance then they should send any claims to

Jetmagic
Refunds Department
5100 Airport Business Park,
Cork,
Ireland.

A special free phone number has been set up to provide information and advice - the number to call is 1800 301060 within the Republic of Ireland, and +353-21-4518915 from outside the Republic of Ireland. These numbers will be operational from 7am on the 29th January 2004.

Eurorunner

It was always going to be a rough ride for them stepping into that market, starting from scratch - at the time that they chose...

dahamsta

This is the problem with cut-throat competition, one false step and you're laughing on the other side of your face.

ISEQ falls as Ryanair shares dive over 25%
28/01/2004 - 6:59:53 pm

The ISEQ closed 150 points lower, or 2.86%, at 5,106 this evening, as Ryanair slumped over 25%, losing more than €1.5bn in value after the company warned that lower fares would result in a fall in its full-year profits and that yields in the three months to March 2004 could fall by as much as 30%.

Concern also about the impact of next week's EU Commission ruling on its Charleroi hub also weighed on the stock which closed down €1.89 to €4.86.

[...]

Tricky business.

adam

Sleipnir

Great time to buy Ryanair shares now!

That thing about magic is a shame really, same thing happened to the airline she worked for (after she'd left)
The staff found out when someone's mother saw it on the T.V. and rang her daughter to say that the airline had shut down!
They were about to get on a flight.

The airline left all the passengers and staff stranded wherever they were. Just
"get home your own way. You're dumped" !!

shoegirl

This is a shame, considering that Jetmagic were particularly trying for a niche market and so not directly competing with the low fares business model airlines.

Unfortunately the market is very much geared towards the low cost business model. It will be interesting to see if the Charloi decision has an impact on Aer Arann, who depend heavily on state subsidies to keep their fares low. The only thing I can say about Aer Arann is that they compete with road and rail on some routes, and are probably far less heavily subsidised than say, Irish Rail or Bus Eireann.

Borzoi

Originally posted by dahamsta

Tricky business.

The old business saying:
How do you make a millionaire? Start off with a billionaire and start up an airline:D

Aer Arann subsidies are legit as they are governmental direct route subsidies which are open to competitive tender every few years, unlike the deal in Charlsroi where the local department were subsidising Ryanairs marketing

star gazer

It was a curious thing for Aer Lingus to suddenly start up on some of the continental routes jetmagic had run routes to. It probably was going to take a little longer than a year for businesses to trust jetmagic enough to change to them, but in the end we will never know. Every substantial airport needs an airline based in it, to give the location a boost.

Victor

Parallel thread http://www.boards.ie/vbulletin/showthread.php?s=&threadid=138021

Floater

Jetmagic had five high load factor routes – Nice, Barcelona, Alicante, Nantes and Milan. Aer Lingus decided to go after three of them (BCN, MXP and ALC) last September, less than six months after the airline commenced operations. Prior to that Aer Lingus were in “pull out” mode at Cork airport. Along comes JM and suspiciously, all of a sudden, EI want to set-up direct routes to three JM destinations from Cork.

It is obviously much easier to choke a six month old baby than a fully grown adult!

In Ireland (as in many other parts of Europe) the state airlines can, and have, got away with murder over the decades. As did state controlled anythings (eg eircom, ESB, Irish Rail, Dublin Bus, Bus Eireann, etc etc). [One can see the same thing at EU level with the Commission’s attack on Ryanair and regional airports – sponsored by Lufthansa & Co – an airline that has received billions of Euros in direct and indirect subsidies over the decades from the Federal government to pump it up ready for global domination in its post privatisation period. Ditto for BA and Air France from their respective governments].

The Munster market could not support two airlines between these points (eg ORK > ALC etc). Investors in Jetmagic obviously had no choice when they saw that the Irish Government was prepared to let its state company, with infinitely deeper pockets, go after the markets they had just created to put them out of business, (before they had an opportunity to develop a critical mass).

Yet another example of the cluelessness of the government’s dysfunctional transport “strategy”, whose only common thread seems to be “centralize it”.

Every time yours truly (and others) find themselves lugging suitcases across long corridors at Dublin airport (where there is no longer even a flight connections facility) we will be thinking of the bastards in Aer Lingus and the Dept of Transport who were party to the demise of Jetmagic.

Landing charges and airport ownership are largely irrelevant. The big issue is the number of airlines and the routes that serve an airport. The average passenger doesn’t care if the landing charge is EUR 5 or EUR 15 at a particular destination – even if they have to pay the cost in the form of a surcharge on top of the ticket price - they just want to get to their chosen destination for a reasonable overall price, ideally on a direct flight.

While I am not advocating a carte blanche for the Aer Rianta mafia, I am saying that there is a bigger mafia out there that got away with murder yesterday.

I sincerely hope that the shareholders and other creditors of Jetmagic sue the State and the State airline to recover their losses.

Unless the perpetrators are taught a lesson, they will feel free to use similar tactics should the “need arise” in future. The fact that they might be seen to have gotten away with it will surely be enough to put some prospective entrants into regional aviation markets in Ireland off?


Floater

Nuttzz

I understand what you are saying floater but every company is going to protect itself from new entrants, if EI was in private hands I doubt they would do anything different.

Floater

Originally posted by Nuttzz
I understand what you are saying floater but every company is going to protect itself from new entrants, if EI was in private hands I doubt they would do anything different.

Aer Lingus is a state owned company.

It acted predatorily to put a privately owned company out of business.

It succeeded in its objective.

These actions cost the shareholders and other creditors of Jetmagic almost EUR 15 million.

Aside from their rights under Irish and EU law, the creditors / contributories surely have constitutional private property rights under Bunreacht na hÉireann which were violated by the “Dept of Air Travel” in the process.


Floater

daveirl

This post has been deleted.

star gazer

It is ironic that the companies that receive massive state subsidies over the years suddenly turn around and say their competitors should get no subsidy.

As for Jet Magic, the policy makers in the department of transport obviously decided that it was no t for them to intervene when their company wanted to intervene on Jet magic routes. If there was a figure for the cost to aer lingus for the threee routes they competed with Jet magic's routes it would be interesting to see how much of a loss they made. If on the other hand they made profit, the mind boggles as to why they didn't notice that there was a potential out of cork airport for new routes. In a free market there shouldn't be any intervention, however the airline industry is not free and Aer Lingus itself received hundreds of millions in subsidies down through the years. This gave it an artificial competitive advantage, and with that should have come some constraints. Dublin is at capacity and if there is a chance to take away some of the traffic, until a new terminal, runway/airport are built, then take it.

Cork

People vote with their feet - people expect low air fares.

Mid-Priced carriers face a battle.

But - Cork airport is now at a loss- with many Cork people having to travel to Dublin for flights.

The sooner Aer Rianta is broken up the better.

Nuttzz

Originally posted by Floater
Aer Lingus is a state owned company.

It acted predatorily to put a privately owned company out of business.

It succeeded in its objective.

These actions cost the shareholders and other creditors of Jetmagic almost EUR 15 million.

Aside from their rights under Irish and EU law, the creditors / contributories surely have constitutional private property rights under Bunreacht na hÉireann which were violated by the “Dept of Air Travel” in the process.


Floater

Floater,

I am just saying that any business private or public will do its best to protect its interests. This happens in the private business world all the time, the big eat the small unless the small can give something special, Jet Magic werent. Its a shame.

Floater

Originally posted by Nuttzz
Floater,

I am just saying that any business private or public will do its best to protect its interests. This happens in the private business world all the time, the big eat the small unless the small can give something special, Jet Magic werent. Its a shame.

You are missing my point!

If Ryanair did this to Jetmagic, one might argue that it was a “commercial matter”. Aer Lingus is a different kettle of fish.

Article 43 of the Constitution of Ireland is in place to protect private property rights of individuals from the actions of the state.

Aer Lingus is a state entity. Jetmagic is private property, as are the majority of its creditors (aside from Aer Rianta).

Rather than encouraging the new airline, the State decided to go after its three most promising routes and dump capacity at them using the State airline. Actions like this are guaranteed to frighten bankers and deep pocketed shareholders from increasing their exposure to the company.

The State can’t hide behind a body corporate to evade its constitutional obligations – otherwise they would be setting up companies here, there and everywhere to do us out of our constitutional rights!

JETMAGIC SHAREHOLDERS (AND OTHER CREDITORS) SHOULD SUE THE STATE TO RECOVER THEIR INVESTMENT IN THE COMPANY!

Floater

Nuttzz

ahh gotcha