Case Study BAC 7114 The Ethics of Bankruptcy: Jetsgo Corporation
Case 2: The Ethics of Bankruptcy: Jetsgo Corporation
The discount airline Jetsgo Corporation began operations in June 2002. Within two-and-half years it grew to become Canada's third-largest airline, moving approximately 17,000 passengers per day on its fleet of 29 airplanes, 15 of which were company-owned Fokker F100s. With 1,200 employees, the company serviced 20 locations in Canada, a dozen in the Caribbean, and 10 in the
United States.
Jetsgo was a private company owned by Michel Leblanc. Leblanc had lived his life around airplanes. His father owned a flight school; he learnt to fly at 16. In his twenties he was an aircraft salesman; in 1978 he co-owned an eleven airplane forest-spraying business. From 1985 to 1990 he was a partner in Intair a regional airline in Quebec. In 1991, he and a new partner started Royal
Aviation Inc., which he sold in 2001 for $84 million in stocks to Canada 3000. Although he was subsequently sued by Canada 3000 for providing inaccurate financial information, the case was never tried because Canada 3000 went into bankruptcy protection in November 2001.
In June 2002 he launched Jetsgo. On Friday March 11,2005. Just before the busy Spring-break travel week, Jetsgo entered bankruptcy protection stranding thousands of passengers who could not return home and annoying those who could not leave on their spring-break holiday.
Throughout its short life, Jetsgo was plagued with both financial and maintenance problems.
Leblanc kept operating costs low by: • paying low wages; • making pilots pay for their own training; • leasing old aircraft; • minimizing space parts inventory by flying only two types of airplanes: the McDonald Douglas Md-83 and the Fokket F100; and • promoting ticket sales through the Internet.
