Says Funding Hasn't Come Through For Expansion
ANN REALTIME REPORTING
05.06.08 1555 EDT: Citing difficult times within US
investment markets -- and resulting issues with securing new
investment capital -- DayJet announced Tuesday the Florida-based
air taxi service plans to drastically scale back operations.
ANN has confirmed with DayJet executives 100 people were laid
off, reducing the company's workforce to 160 employees.
"Effective this week, we have made the difficult decision to
scale back DayJet’s 2008 growth plan," DayJet CEO Ed
Iacobucci told ANN. "Because of this change in strategy, the
company has reduced its employee base across most areas of its
business. As I will explain, these changes were caused by external
economic factors and are not a reflection of a weakness in the
underlying DayJet business model."
Iacobucci stressed the first phase of DayJet's operations "has
gone exceptionally well... Yes, customers will fly in a small jet;
Yes, customers will embrace the per-seat model; Yes, customers will
pay a premium for tangible value; Yes, the technology works as
planned; and most importantly, Yes, we can find these
customers."
DayJet claims over 1,500 members, of which more than 550 are
active DayJet users and close to 200 are frequent flyers, according
to the company. Despite what would appear to be respectable numbers
for a company that launched full operations in October 2007,
however, Iacobucci said more cash was needed before DayJet could
grow its network... and those funds have proven hard to come
by.
"Our projections have always indicated a network of 30-50 "line"
aircraft serving 20-30 fully developed DayPort markets was needed
to reach critical scale," Iacobucci said. "More importantly, this
required a $40M infusion of operating capital in the first quarter
of 2008. I won't dwell on this point, but suffice it to say that
given the current state of the US capital markets, the timing of
our planned financing could not have been worse.
"Without the growth capital required to open new markets, the
company must scale back to a size that is consistent with the
demand of our existing customers and service region," Iacobucci
said. "DayJet’s business model is based on operating at a
critical mass, requiring investment ahead of growth. We hired and
trained a number of employees in anticipation of future growth and
always planned for additional capital investment at this
stage."
DayJet stresses it does not plan to shrink its existing service
region -- though the company is scaling back plans to expand that
area -- nor will Tuesday's developments "impact our quality of
service to our customers, and most importantly, it will not impact
our commitment to safety, which is the heart of our service.
"And when the capital markets recover, then we would expect to
resume the growth forecast in our original plan," Iacobucci
concluded.
DayJet operates a fleet of 28 Eclipse 500 very light jets. The
air taxi provider is by far that planemaker's largest customer,
with reportedly some 1,400 planes on firm order or option. Despite
the ominous tone of Tuesday's announcement, however, Eclipse CEO
Vern Raburn told ANN he is not overly concerned about DayJet's
future and expressed great confidence that they will prevail.
"The last company I'm losing any sleep over is DayJet," Raburn
said.
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