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Fri, Sep 19, 2008

Aero-News Alert: DayJet Ceases Operations, Iacobucci Steps Down As CEO

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 Sun-Sentinel.

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 works.

"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 system.

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.

Original Story

1520 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 stage."

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.

FMI: www.dayjet.com, www.eclipseaviation.com 

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