Airlines around the globe are struggling right now, and asking for government aid. Apparently those requests aren’t just limited to airlines that actually exist, though. Avatar Airlines has become the latest US airline to request government aid.
What is Avatar Airlines?
I’ve written in the past about Avatar Airlines, which is an airline that has been nearly 30 years in the making.
Avatar Airlines wants to launch domestic flights exclusively with 747s. The company argues that airlines have been switching to smaller and smaller planes on domestic routes, but the per passenger costs are much lower on bigger planes, and that’s why they’ve chosen the 747.
The airline also hopes to make money by turning their planes into “flying billboards,” as they describe it.
Keep in mind that they have no planes, no operating license, and they’ve been working on this concept since 1992.
Avatar Airlines requests government aid
As part of the CARES Act, US airlines are getting nearly $50 billion in loans and grants in light of current circumstances. Airlines have to specifically apply for this, and the latest airline to request aid is… Avatar Airlines.
The airline wrote a letter to US Secretary of the Treasury Mnuchin explaining why they want $15 million in aid (they misspelled his name in the letter, by the way). I’ll post most of it below, because wow:
If you haven’t already heard of Avatar Airlines, I would like to introduce you to our company and where we are in our evolution. Further, I would like to explain why this airline, in our opinion, is critical to the future of the aviation/transportation industry.
Avatar is a start-up business with a unique approach to the industry offering everyday low-fare flights as our primary strategic approach to the aviation sector. We have made significant progress for a company that, to date, has not had any significant capital infusion. Our team of executives and management have led us to the point of producing a comprehensive Private Placement Memorandum (PPM) for qualified investors and subsequent submission of our application to the DOT/FAA for full certification.
With the out-break of COVID-19, and despite the efforts of the Stimulus package, there will, unfortunately, be casualties in an industry currently characterized both by high debt and high breakeven load factors. As the coronavirus essentially shuts down one carrier after another, Avatar continues to move forward as it is not and will not be impacted by COVID 19 given our current plans to be fully operational by mid-2021.
As a start-up, we have no flights, no overhead, administrative expense, or fixed costs at the present time, and when we are fully operational anticipate adding 2000-3000 full time employees. Our plan is to work our way through the five phase DOT/FAA certification process that normally takes approximately 12 months to complete. We are presently in Phase 1 with the initial in-brief meeting with the DOT/FAA tentatively scheduled for the end of May of this year.
As reflected in the PPM, Avatar is clearly poised to present a paradigm shift to the aviation industry when it commences operations next year. Thus, we have arrived at a stage today where the timing for a significant capital infusion could not be more opportune and we invite you to review the PPM, which can be found at https://avatarairlines.com/investor-information/, to determine for yourself that Avatar Airlines will be the new standard by which others will be measured.
Please see our enclosed application to be included in the Class of Passenger Airlines within the United States entitled to Emergency Financial Assistance in the form of Grants or Loans.
- The airline has been working on launching since 1992, but they feel that this is the worst thing to happen to them, and they plan to be operational by mid-2021
- They proudly claim that they “have no flights, no overhead, administrative expense, or fixed costs,” but they don’t seem to realize that this is also exactly why airlines are getting aid
- Avatar Airlines needs $300 million in funding to get off the ground, but COVID-19 has had a “crippling effect on the stock market and the nations [sic] economy as well as the fiscal and psychological state of its prospective investors”
- The airline feels that this is a great time for a capital infusion to get this airline a jumpstart, and apparently that’s what the CARES Act is for?
(Tip of the hat to @LKulve)