Customers Told To Seek Refunds From Credit Card Companies
ANN REALTIME UPDATE
09.19.08 1830 EDT: The company seen by many as the
proverbial canary in the mineshaft for the greater success of the
very-light-jet industry -- and for one company in particular -- has
ceased operations. Florida-based DayJet has ceased all operations,
due to "economic reasons."
The company informed the FAA at around 12 pm EDT Friday it would
park all but one aircraft, which will continue to be used "by
executives," FAA spokesman Les Dorr told the South Florida
Late Friday afternoon, the DayJet Web site was replaced with a
message to customers, saying the company had "discontinued its jet
services and cancelled all future flights as a result of the
company’s inability to arrange critical financing in the
midst of the current global financial crisis." In a separate
message, DayJet says it tried until "late Thursday" to secure that
financing, but was unable to do so.
"We deeply regret the disruption and hardship to customers,
suppliers and employees caused by this unexpected shutdown of
commercial operations," said DayJet founder Ed Iacobucci. "Twelve
months ago our team launched a new regional transportation model.
During the past year, we have demonstrated, beyond a reasonable
doubt, that customers will sign-up, purchase, and become frequent
users of this new service -- the DayJet 'Per-Seat, On-Demand' model
"It is unfortunate that these developments have come at the same
time our nation has fallen into the most serious capital crisis of
our lifetime. Regrettably, without access to growth capital, we
have no choice but to discontinue operations."
Iacobucci also stepped down Friday as DayJet CEO, though
according to the company he will continue to serve as Chairman of
the Board of Directors. DayJet CFO and Senior VP of Operations John
Staten has been named interim CEO with responsibility for managing
the affairs of the company.
Founded in 2002, DayJet is the largest customer for Eclipse
Aviation's EA500 VLJ, with reportedly close to half of that
company's oft-touted 2,700 orders -- though DayJet only took actual
delivery of 28 aircraft. On Friday, the company pointedly said its
start was "plagued by three years of delayed aircraft deliveries,"
in what could be perceived as a parting shot against Eclipse.
Earlier this year, DayJet partnered with Embry-Riddle
Aeronautical University and the FAA to test technologies to be
deployed as part of the agency's "NextGen" air traffic control
Initially touted as a five-day-per-week, "on-demand" air taxi
service, DayJet increasingly moved away from that model in actual
practice. As recently as two days ago, the company's newsletter
advised customers of the opportunity to charter whole aircraft for
weekend travel... with 60 days advanced notice.
ANN will provide more details as they become available.
EDT: ANN is monitoring a number of gloomy reports
that suggest that the DayJet effort may be coming to an end.
Current reports from industry insiders suggest that the program is
in dire need of capital, that the current financial maelstrom bodes
ill for any last minute resuscitation, and that a cessation of
operations may, tragically, be imminent.
One of the most eagerly anticipated transportation programs in
the aviation arena, the DayJet program is the brainchild of Ed and
Nancy Iaccobucci. DayJet had intended to pioneer a new type of
regional travel, what they termed "Per-Seat, On-Demand" jet service
that was 'uniquely tailored' to accommodate the flight time
requested by each customer and priced at a modest premium to
full-fare coach airfares. Headquartered in Boca Raton, FL DayJet
had put particular emphasis into the development of this industry's
'first real-time' operations system.
In early March of 2007, DayJet received $50 million in capital,
resulting from the completion of its third round of private equity
financing... which the company indicated that they hoped would take
it through the launch of its on-demand air taxi operations, then
scheduled for the second quarter of 2007.
By May of this year, however, DayJet was forced to "scale back"
operations due to the lack of necessary capital to continue the
expansion of the program. DayJet cited 'difficult times' within US
investment markets -- and resulting issues with securing new
investment capital for the failure to attract the needed cash. At
that time, DayJet executives confirmed that 100 people were laid
off, reducing the company's workforce to 160 employees.
It was a crushing disappointment... especially in light of the
fact that Iaccobucci's model was proving to be a solid one. Ed
(pictured above) remained optimistic back ten whole noting that 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 claimed over 1,500 members by mid-spring of 2008, of
which more than 550 are active DayJet users with close to 200 said
to be 'frequent flyers.' Despite what appeared to be respectable
numbers for a company that launched full operations in October
2007, however, Iaccobucci said more cash was needed before DayJet
could grow its network... and that those funds had been 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," Iaccobucci 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," Iaccobucci
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
DayJet was operating a fleet of 28 Eclipse 500 very light jets,
making them Eclipse's largest customer, with reportedly some 1,400
planes on firm order or option.
ANN will provide more information as it becomes available.