Nobody knows full well that they won’t be able to deliver. Do you think that American or United are not taking any reservations right now? Yet by next week given the right circumstances they could both be dead. This company was doing the usual business and just couldn’t make it.
American and United are publicly traded companies. The state of their finances is public information, available to anyone. The top level of management in those companies can’t do a whole lot to grossly mislead the public about whether they’re likely to be forced into bankruptcy, and any filing for bankruptcy on their part will not come without any warning at all. Jetsgo, on the other hand, is a privately held company with no obligation to make its finances public. Hence, when Leblanc lied about the state of Jetsgo’s finances, he was intentionally misleading a public that had no other insight into Jetsgo’s finances.
Frankly, I find your position a bit odd. If I set up a company that sells widgets and then go running around taking orders and accepting payment for it, all the while knowing that I won’t be able to deliver widgets, but pay myself a nice salary and then have the company file for bankruptcy, making sure that the salary I drew is protected as private assets from the bankruptcy proceedings, I can’t fathom how I haven’t committed fraud. That’s what fraud is - intentional deceit intended to induce others to part with items of value.
Southwest. And with service starting soon in Pittsburgh, it’s a decent option if you’re closer to Pittsburgh than to Philly.
Can you prove that they knew that they were going to shut down? If not, than you can’t prove fraud. I haven’t seen anything that leads me to believe that up until the last minute they thought they were going to stay in business.
Well, I certainly can’t prove anything, not being privy to the relevant information. However, if one issues the statement Muffin quoted, and truly believe that you’re operating on “a good financial basis”, only to file for bankruptcy a mere month later, you’re incompetant. So you’re right, maybe he’s just a moron who doesn’t understand the financial operations of his airline. Or he was lying. I think the latter is more probable. The fact that Jetsgo appears to be tying to pin the blame for their failure on WestJet doesn’t really inspire confidence in their honesty, though.
Although I can’t currently find the news article, there was a story in the local newspaper about a woman who bought her ticket the night of, before the announcement, and was still allowed to buy it (for a trip the next day).
It’s bullshit that they didn’t know by then.
An article in the Globe and Mail on the sordid affair. A few snippets:
Don’t try to tell me that an airline with 14 MD-83s and 15 Fokker 100s can be losing 10 million per month without its owner recognizing that he’s going down in flames. So what did he do? Announce expansion of service mere days prior to the bankruptcy filing.
Jetsstop? 
Airman, why are you defending a corporate executive who more than likely (and it’s really, really likely) knew exactly who he was screwing and how badly, and had all of this planned well in advance? Executives like this are the reason that there is legislation like Sarbanes-Oxley in the works to put a stop to the Enrons and Arthur Andersens, and actually make the person making the decisions and taking home the big bucks responsible for the results of his decisions.
You know something? You’re right. I shouldn’t be defending him, I should be sticking it to the greedy corporate bastard. I mean, even if he was trying to make a go of things (like he has the other three times, which just goes to show you that it ain’t the easiest thing in the world to do to start an airline) he still fucked his customers, and even though I don’t know for sure I’ll just assume he did it intentionally. He’s human slime! Let’s get the bastard! Corporate greed! Fraud! Shenanigans!
Better? :rolleyes:
You are probably being sarcastic, but they are greedy corporate bastards, he fucked his customers, he probably did it intentionally (he probably didn’t screw them intentionally, but he did what he needed to do to help himself, and if the fallout of that screwed his customers, no big deal), and yes, this is an example of corporate greed and fraud. I agree with you.
The airline that takes passengers for a ride without leaving the ground.
Actually, as opposed to showing me that running an airline is hard, it shows me that this guy is not capable of running an airline. If this is the 4th airline that he’s driven into the ground, you’d think he’d get the hint and try something else. I hear there are opportunities in swine.
Yeah, go with someone like Braniff; oops, sorry, I meant TWA…er, Unite…um…Pan Am? I know…Quantus! 'Course, you’ll have to fly to and from Australia, but hey, they’ve good some good beer there.
Well, FedEx and UPS seem to keep their planes flying on schedule. Perhaps you could just ship yourself in box.
Stranger
One of our regional freight carriers, Wasaya, started offering passenger service in 2003 to over a couple of dozen destinations.
And therein lies the fundamental reason why JetsGo failed. Wasaya expanded into pasenger service to meet a real market demand (and on a larger scale, WestJet expanded its existing passenger service to meet real market demands), wheras JetsGo bought out an old existing fleet from a failed budget airline (Canada 3000) and assumed that a market was either there or could be created. With JetsGo, it was the cart (or the air fleet assets) pushing the horse.
That’s not how bankruptcy court works. Bankruptcy legislation establishes a system of priorities. Secured creditors come first. So suppose Royal Bank loaned Jetsgo the money to buy five planes. As a condition of the loan, Jetsgo would give Royal Bank a security interest in those planes, so that if Jetsgo goes under, the Royal Bank would get those planes. The planes wouldn’t be available to help cover the bankrupt’s debts to other creditors.
Then there’s the assets that are unsecured, which are available to pay unsecured creditors. However, those assets aren’t divvied up evenly. They’re distributed according to the ranking of priorities set out in the Bankruptcy and Insolvency Act. High up on that list are suppliers to the bankrupt (e.g. - the airports that rented them their gates). Once the group that’s first in priority are all paid out, you move on to the next prioritiy group, such as the bankrupt’s employees. Once the employees are fully paid, you move on to the next group in the sequence, according to their priority.
Problem is, there likely won’t be enough money to pay out all the creditors. That’s what bankruptcy is all about, after all - one definition is that one’s assets are no longer sufficient to cover all one’s liabilities. So when you get to very bottom of the list, the unsecured creditors who don’t have any special priority, there generally isn’t any money left to pay them. Customers who have bought a service and paid in advance normally come into this category. So, I doubt very much that the “the bankruptcy court will almost certainly ensure that the customers get their fares back.” Can’t get blood from a stone, etc.
The corporation will likely never be an undischarged bankrupt, and will likely be wound up as worthless, but that’s not what Muffin is talking about. He’s suggesting that the executives of the airline be held personally responsible, and go into personal bankruptcy to have their assets applied to the debts of the corporation.
Absent proof of fraud, that’s not going to happen. The whole point of a limited liability company is that the company has separate legal personality from the shareholders and executives. The debts of the company are not the debts of the shareholders or the executives. That separate legal personality is essential in modern commerce to make the system work - who would invest their money or run a corporation if by doing so they’re accepting unlimited personal liability? Would you?
So, absent fraud, the executives in question will not go into personal bankruptcy, and their personal assets are not subject to distribution by the bankruptcy court to pay the creditors of the bankrupt company (assuming it goes into bankruptcy, which seems a likely outcome based on the news reports).
Whoops - that sentence in the third paragraph from the end should read: “The corporation will likely never be discharged from bankruptcy…”
I did proof-read, I swear!
Fraud as a director, or gross (as opposed to simple) negligence as an employee, could lead to personal liability. Odds of proving either? Just about zip. But one can wish.
/travel guru hat on/
I can only say how glad I am that none of my travelers were put out by the recent demise of JetsGo. It’s just luck that it turned out that way.
On a personal note, even we travel professionals are taken by surprise by airlines that suddenly just stop flying… although, to be fair, we shouild see the writing on the walls.
I took a vacation to St Thomas USVI several years ago on Pan Am. Three days before I was supposed to return, they suddenly stopped flying.
Since I was in the business and flying free, no other airline would honor my unused PanAm return ticket.
Yowch!
/travel guru hat off/
I agree with everything you posted, but maybe it shouldn’t be that way - maybe if you want to run a business, you should have to take a little responsibility for it. Maybe that would fix a few problems with the system. Maybe a few less fly-by-nighters would run one business into the ground, end the business overnight and open the next day under a different name, leaving all their creditors holding the bag.