Kiwi Regional Airlines plans to raise up to $2 million through crowdfunding to buy a second aircraft. The new aircraft would be a Saab 340 QC used for passenger and freight charters and as a backup for maintenance of its existing aircraft Saab 340A. Last month the Hamilton airline cancelled flights after grounding the 34-seater aircraft for unscheduled maintenance. While the Saab was out of action Kiwi Regional called in Air Chathams to run the service using its 50-seat Convair 580. The planned new aircraft would not be used to add capacity or new destinations. Kiwi Regional launched in November and flies Hamilton, Nelson, Dunedin, Christchurch and Tauranga routes. It cancelled a Dunedin-Queenstown service less than a month after launching. Crowdfunding requires members of the public to donate money towards a project or business. Some platforms allow pledgers to claim a stake in the project or company if the campaign successfully reaches its funding target. Kiwi Regional chief executive Ewan Wilson said the fundraiser would be an equity crowdfunding campaign, meaning if the campaign reaches its target, pledgers would become shareholders. No crowdfunding platform had been chosen. "I find the idea of a community of New Zealand shareholders being a part of Kiwi Regional Airlines quite exciting," Wilson said. There are eight crowdfunding platforms in New Zealand licensed by the Financial Markets Authority to let businesses sell shares to the public through their website Wilson said having only one aircraft meant maintenance could be costly. "When the aircraft breaks down we have to hire another one to be able to provide good customer service, that can be an expensive process to have only one airplane." Vehicle importer and retailer 2 Cheap Cars originally owned almost a quarter of the airline but that was diluted as Kiwi Regional issued more shares. 2 Cheap Cars sold its remaining 10.4 per cent share in the airline to Andrew and Anne King of Hamilton. King's investments include Kings Finance and Kings Cars. He is not a Kiwi Regional director or part of the airline's management.
Source : http://www.stuff.co.nz/business/industries/77605344/kiwi-regional-airlines-plans-to-crowdfund-2-million-for-new-plane
Source : http://www.stuff.co.nz/business/industries/77605344/kiwi-regional-airlines-plans-to-crowdfund-2-million-for-new-plane
"Dreamer, you're nothing but a dreamer"
ReplyDeleteOn 6 March (yes, on Sunday) Guy Domett registered a further share issue of 354,275 shares, taking total shares to 1,759,275. Each of the Dometts took another 150,000; the newly arrived Kings took 20,000;Ewan Wilson took the balance.
ReplyDeleteMr Wilson doesn't seem to know much about selling shares on crowdfunding sites such as Snowball Effect. They don't raise donations (that's Givealittle); you still provide significant investment details (though much less than a full prospectus); and you specify a minimum subscription. If that minimum is reached, the shares are issued and the company gets the money. If not, the offer fails and the money goes back to the would-be investors. You can specify and take "overfunding" up to a maximum share sale of $2 million in any one year.
Meanwhile Mr Wilson is reported as saying that the 14 May changes to schedules will take KRA into profit. That presumably means it is not now in profit...
If you have read his book on the first Kiwi Air this is spookily familiar - no back up aircraft, orphan type, not enough capital, sudden rush to Australia to get a needed spare part...
So basically anyone that buys shares will have them diluted ??
ReplyDeleteJust flicked through "Dogfight"....yes, there is a chilling parallel here.
ReplyDeleteI think KRA needs to pull back ambitious ideas for now.
Most startups would take time to get to profit, but yes is an odd way to proceed. The charter market has been relatively bouyant this season, so perhaps some truth with that. Really though, how much is a second 340 going to cost, I would have thought just a small number of shareholders would be able to manage.
ReplyDeleteIf GBA can manage to get an arrangement working for a $2M aircraft, surely KRA could?
REX regional airlines in Australia has a fleet of 52 Saab 340s.
ReplyDeleteREX has Saab 340A, 340B and Saab 340B+, so KRA could have a chat to them to see if they can have a semi wet lease (not including crew) of REX only Saab 340A.
It would be cheaper than purchasing a second Saab.
NO!
ReplyDelete