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Multimillion dollar lawsuit is the latest twist in Canada Jetlines story

Multimillion dollar lawsuit is the latest twist in Canada Jetlines story

Friday, November 22, 2019

VANCOUVER — Canada Jetlines has filed a lawsuit against defendants including airline entrepreneur David Neeleman, in the latest turn in the ultra low-cost carrier’s saga.

Neeleman was one of the co-founders of WestJet in the mid-1990s. He went on to start JetBlue in 2000 and is also co-owner of TAP Portugal. Neeleman’s latest venture is Moxy, billed as a low-cost carrier with high-end onboard perks. That carrier is aiming to launch as early as 2020.

Meanwhile Canada Jetlines has all but foundered in its attempts to take flight. In September 2019 the would-be ultra low-cost airline said that in order to get its planes in the air by December 2019, it would need more money. The setback was the latest of many and talk of a launch has gone on for several years, with various dates.

In October 2019 Canada Jetlines announced yet another delay plus the resignation of its current CEO, Javier Suarez, and layoffs for most of its staff. In its October statement Canada Jetlines also lashed out at its Canadian competitors.

Now Canada Jetlines is suing Neeleman, DGN Corporation and Breeze Aviation Group, Inc. for what it estimates should be US$27 million or higher. Why? Canada Jetlines says the defendants “embarked upon a predatory scheme to destroy the relationships” between Jetlines, on one hand, and Jetlines’ then-CEO and a leading international investment bank on the other hand.

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In June 2018 Canada Jetlines brought Lukas Johnson onboard as its CEO. Before joining Canada Jetlines, Johnson spent eight years at ultra low-cost airline Allegiant. In its suit Canada Jetlines alleges that Neeleman “sought to lure Johnson away from Jetlines and otherwise to obtain his services and advice” for Moxy.

Canada Jetlines alleges that Johnson’s departure and the circumstances surrounding it was the beginning of the carrier’s latest difficulties.

Among the allegations, Canada Jetlines says the defendants “conspired with Johnson to mislead Jetlines and the Bank into believing that Johnson was fully committed to Jetlines’ future and to seeing its financing effort and operational launch through to their conclusion, even as Defendants were working secretly with Johnson to engineer his departure at the point in time most likely to injure Jetlines. Neeleman’s overriding purpose in that deception was to derail Jetlines’ relationship with the Bank and thereby to delay and hinder Jetlines from obtaining new financing and commencing operations as a Canadian ULCC. In that, he succeeded.”

The suit goes on to say that “late in the evening of August 27, 2018, as Jetlines and the Bank were poised to launch their critical presentations to prospective investors, in which Johnson was to play a central role and which were structured to emphasize his standing in the industry and his importance as Jetlines’ CEO, Johnson stunned Jetlines by announcing without prior warning that he would be resigning in order to work for Neeleman’s new venture, Moxy. Almost immediately thereafter, and before Jetlines itself could respond to the event that Neeleman had secretly orchestrated over the course of at least the preceding month, Neeleman telephoned the Bank’s Managing Director in charge of the Jetlines project and announced that he, Neeleman, had hired away Jetlines’ CEO. Neeleman had no other legitimate purpose for making that call at that time.”

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Soon after that, alleges Canada Jetlines, the bank suspended its efforts to find new financing for the would-be ULCC.

The suit goes on to allege that “Neeleman’s intentional interference with Jetlines’ relationships with Johnson and the Bank has caused substantial damage to Jetlines.”

Canada Jetlines filed the suit earlier this week in the United States District Court (District of Connecticut). The allegations against Neeleman, DGN Corporation and Breeze Aviation Group, Inc. are tortious interference with business expectancy and violation of the Connecticut Unfair Trade Practices Act.

Canada Jetlines says it will “make further announcements on the case in due course”. The lawsuit can be seen at https://jetlines.com/_resources/Complaint-Action-no-01850.pdf.

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