The clouds were already darkening around Jetsgo Corp. when Michel Leblanc rose on the morning of Feb. 24.The airline he founded in 2002 was losing $10-million a month and was running out of cash to pay its bills. Transport Canada officials were increasingly concerned about Jetsgo's safety record.
And Clive Beddoe, the chairman of WestJet Airlines Ltd., had thrown down the gauntlet the previous week, with a very public warning that he was willing to sacrifice revenue to preserve WestJet's market share. Mr. Beddoe said Jetsgo was setting fares at ridiculously low levels, but he was prepared to match them if he had to.
If there's anyone who knows what an airline looks like in its final moments, it should be Mr. Leblanc, who has been involved in three airlines that didn't make it: Intair, Royal Airlines and Canada 3000.
But if Mr. Leblanc could see the vultures circling on Feb. 24, he sure didn't show it.
Instead, he announced an aggressive expansion of Jetsgo in Western Canada, adding flights to Regina and a marked increase in capacity on western routes.
"This is great news for consumers in Western Canada," Mr. Leblanc said. "We began our strategic expansion last September and in January added five additional cities. It's been obvious from the response that consumers appreciate competition and the value it produces."
He wasn't done. A week later, Mr. Leblanc announced that Jetsgo would add flights to Gander, Nfld., as part of its "ongoing commitment to the people of Eastern Canada."
Jetsgo never made it to either Regina or Gander. Instead, the airline grounded its flights and filed for bankruptcy protection yesterday.
If airlines were like baseball, Michel Leblanc would have used up his three strikes before launching Jetsgo.
Like so many in the industry, Mr. Leblanc appears to be addicted to jet fuel, a serial airline entrepreneur who has been involved in three separate carriers that now litter the airline graveyard: Intair, Royal Airlines and Canada 3000.
Mr. Leblanc's track record is sure to raise questions about whether there are reasons for his dismal pattern, beyond simply bad luck. It also raises questions about whose job it is to protect the public from repeat offenders.
"This is an industry where there is a lot of irrationality and all of this stems from a basic human instinct, which is called the love of flying. There are individuals who are just absolutely fascinated with the idea that you can take a cigar-shaped tube and put it up 30,000 feet in the air and it will stay there and take you across the world," said Joe d'Cruz, a professor who heads the aerospace management program at the University of Toronto's Rotman School of Management.
"The romance of aviation is just an incredible opiate and clearly Michel LeBlanc had one of the most serious cases of addiction."
Associates say Mr. Leblanc is an extremely private man, a chain smoker with a thick Québécois accent, who tended to run his airlines as a one-man show.
His controlling role in the business, coupled with his reluctance to carry a cellphone sometimes created challenges, when important decisions could not be made without his blessing.
Even for those who know him well, Mr. Leblanc can be a difficult man to figure out. On the one hand, he likes spending his money on fast cars; on the other, he adopted two Mexican orphans with his wife, Louise Saumier, who was vice-president of marketing under Mr. Leblanc at Royal Airlines.
The former Cessna salesman is known as a tough negotiator, say those who have sat opposite him.
"He makes sure that he keeps you on the edge," said Luc Filiatreault, chairman of NordTech Aerospace Inc., which performed maintenance, repair and overhaul for Jetsgo planes. "But my personal experience with him is that when he gives you his word, he keeps his word. I certainly never experienced any problems with Michel. He's a very astute business person."
But others have raised questions about Mr. Leblanc's integrity.
In 2001, after Mr. Leblanc sold Royal Airlines to Canada 3000 for $84-million in stock, Canada 3000 turned around and sued Mr. Leblanc and another former Royal executive, alleging that they had overstated Royal's financial position in the days leading up to the March merger of the two airlines. The suit was never resolved.
Like many so many of his contemporaries in the airline industry, Mr. Leblanc was smitten with airlines at a young age.
He was born in Montreal in 1946, the son of used car salesman who loved planes so much that he sold his General Motors dealership for a Cessna dealership, which later opened a flight training school.
Mr. Leblanc's father took him on his first plane ride, on a Piper J3 seaplane, when he was seven years old. He got his student pilot's licence on his 16th birthday -- the earliest possible date -- and got his full private licence the day he turned 17 and a commercial licence the day he turned 18.
He took an MBA at the University of Buffalo before returning home to run the family business. One of his customers was Guy Bernier, who operated a crop-spraying business. The business did well enough, but Mr. Leblanc thought it could do even better. He went into business with Mr. Bernier in 1979, leasing larger planes to do tree spraying for the provincial government.
In 1986, he took on new partners and purchased Québecair, a money-losing regional carrier, from the provincial government. The airline grew quickly and profitably until Mr. Leblanc and his partners re-branded the airline Intair and launched flights against Air Canada and Canadian Airlines on the busy Toronto-Montreal-Ottawa triangle in February of 1990. By the end of the year, the airline had filed for bankruptcy protection.
A year later, Mr. Leblanc launched Royal, a charter airline affiliated with the tree-spraying business.
"For whatever reasons, these people who fail want to keep coming back," said Ben Cherniavsky, an analyst at Raymond James Ltd. in Vancouver. "Once it is in your blood, there's a huge temptation to come back."
The airline grew steadily, allowing Mr. Leblanc and his partners to do an initial public offering in 1993.
In August of 2000, after Air Canada acquired Canadian Airlines, Mr. Leblanc sensed that the public was hungry for competition. He boosted Royal's fleet and turned it into a scheduled carrier.
Early the following year, Canada 3000 swallowed Royal to become Canada's second-largest carrier. Mr. Leblanc was initially handed the vice-chairman's job at the merged airline and was put in charge of Canada 3000's domestic operations.
What followed was his sudden departure from Canada 3000 and a $45-million lawsuit. In a statement of claim, Canada 3000 sought $45-million in damages for "fraud, negligence, breach of contract, conspiracy" and fraudulent or negligent misrepresentation of Royal's financial statements and records.
"Leblanc [and other defendants]engaged in the aforesaid conspiracy in order to induce Canada 3000 to make its offer and complete its acquisition of Royal and to ensure that Canada 3000 offered the highest price possible for the common shares of Royal," the claim alleges.
Mr. Leblanc disputed the allegations, and filed his own countersuit. But the dispute evaporated after Canada 3000 filed for bankruptcy protection in November of 2001, pushed over the edge by the decline in passenger traffic after the Sept. 11 terrorist attacks.
It wasn't long before he was back at it again. In April of 2002, Mr. Leblanc launched Jetsgo Corp., an airline in which he was sole investor.
From the outset, many in the airline industry were skeptical about whether Jetsgo would succeed.
At the time, Mr. Cherniavsky wrote in a research report: "For these guys to enter the market now, with fuel prices where they are, with prevailing economic uncertainty and high insurance premiums and no apparent excess of demand -- all this puts the odds against them being around very long."
Executives at other airlines referred to Mr. Leblanc's airline as "Jetsgone" and spread rumours that Jetsgo was losing money quickly and its monthly traffic statistics were unreliable. But Jetsgo grew rapidly and Mr. Leblanc was able to sell a 10-per-cent stake in the carrier to Fidelity Investments last year for $25-million.
In its court filing yesterday, Jetsgo said it made a slim profit of $781,000 for the fiscal year ended June 29, 2003. Then things started to turn sour. Jetsgo says it lost $9.6-million in the subsequent fiscal year, and $58-million over the last eight months.
Despite those losses, it's hard to know whether Mr. Leblanc made or lost money on the venture because it is a private company, said a government official who knows him.
"The problem with this company is that -- because it was not a publicly traded company -- you don't know what was going on. You don't know who has been paid what, what kind of returns have been taken out of the company."
D&B Canada Ltd., a company that monitors firms' fiscal health based on lawsuits filed, how quickly they pay their bills and economic factors, said its data showed that Jetsgo's financial position worsened significantly last summer.
"Starting in about August or September of this year, we started seeing a decline in how they were paying their bills. Prior to that they were a decent payer, in line with the industry upper quartile," said Lawrence Franco, president of D&B Canada.
That knowledge would have been helpful for D&B's clients, but it's little solace to the thousands of customers who have gambled on Jetsgo and lost.
Some industry observers say one solution would be to force airlines to keep passenger revenue in trust until they actually operate a flight.
Mel Fruitman, vice-president of Consumers Association of Canada, said the government needs to do a better job of protecting consumers.
"If they see a situation like this that is brewing . . . they should either step in and cause them to cease operations until they get their act together, or at minimum, they should be issuing warnings to consumers that this airline is in potential difficulty and be careful about booking with them," he said.
Whether this would be enough to deter Mr. Leblanc from launching yet another carrier is unclear.
"He's more than a three-timer, I think he's a six-timer," Michael Carney, a professor at Concordia University's John Molson School of Business, told Canadian Press.
"Can you guess the name of his next airline?"
Leblanc's grounded flights
Once tagged as a "serial aviation entrepreneur", Michel Leblanc's latest airline stopped flying yesterday, stranding passengers and putting 1,200 people out of work. The Trois-Rivieres, Que., native had had a lifelong love affair with aviation - and a turbulent record of keeping his airlines aloft.
Intair, 1986-1990
Leblanc's title: President
Leblanc's ownership: Major investor
1986: Leblanc and some partners purchase Quebecair, a money-losing regional carrier, from the provincial government.
1989: They rebrand the airline Intair and launch service on the Toronto-Ottawa-Montreal triangle.
February, 1990: Leblanc boasts that Intair is already profitable on the triangle.
November, 1990: Intair files for protection from creditors under the Companies' Creditors Arrangement Act.
Royal Airlines, 1992-2001
Leblanc's title: Chairman and chief executive officer
Leblanc's ownership: 45% (in 2000)
April 29, 1992: First flight.
August, 2000: In response to Air Canada's acquisition of Canadian Airlines, Leblanc expands Royal and transforms it from a charter carrier into a scheduled airline.
January, 2001: Royal Airlines is acquired by Canada 3000.
Canada 3000, 2001
Leblanc's title: Vice-chairman and managing director of the airline's domestic schedule.
Leblanc's ownership: 14 per cent
June, 2001: Leblanc suddenly leaves Canada 3000
Aug. 14, 2001: Canada 3000 sues Leblanc for fraud, alleging he overstated the financials of Royal before the sale.
Nov. 9, 2001: Canada 3000 grounds its aircraft and places itself in bankruptcy two days later.
Jetsgo, 2002-2005
Leblanc's title: President and chief executive officer
Leblanc's ownership: 90% (in 2005).
June 12, 2002: First flight.
March, 2004: Leblanc sells 10 per cent of Jetsgo to Fidelity Investments for $25-million.
March 7: Nav Canada threatens to seize certain Jetsgo aircraft.
March 11: Jetsgo grounds all its planes, files for bankruptcy protection.
Anatomy of a failed airline
Headquarters: Montreal
Ownership: Michel LeBlanc, with Fidelity Investments holding 10%
Logo: Happy face
Slogan: Pay a little, fly a lot
Began operations: June 12, 2002
Passengers: Carried 280,000 a month to destinations across Canada, New York, Florida and the Caribbean
Employees: 1,200 people full-time, including 550 people inflight, 80 in maintenance, 350 for airport services and ramp operations, 220 people in marketing.
Financial results:
Earned $228.7-million for 12 months ended March 28, 2004
Lost $9.6-million in year ended June 27, 2004
Lost $33.7-million in six months ended Dec. 26, 2004
Lost $12-million in January, 2005
Estimates $10-million loss in February
Fleet:
14 MD-83 aircraft. Average age is 10 years; planes are no parked in Vancouver, Toronto and Montreal.
15 Fokker 100 aircraft, leased from American Airlines Inc.
Average age is 12.5 years; planes are now parked in Quebec City.
Ground facilities:
Leases office space near Montreal airport for its head office, reservations centre and accounting department.
Leases counter space in Montreal, Toronto and Ottawa airports
Leases hanger space at Toronto and Quebec City airports
Facilities in other cites outsourced to third parties on a pay-per flight basis