Barry Michaels has been trying to start an airline for 30 years. The idea all along has been the same: fly Boeing 747s domestically with cheap fares. He used to call the idea “Family Airlines.” And he even went to prison for tax and securities fraud in connection with raising money for the venture.
It’s now called Avatar Airlines, and still plans to fly a Boeing 747 from Albuquerque to Las Vegas on a Wednesday. He’s had people out trying to raise money for the airline. Here’s the proposed route map:
Every few months Michaels comes up with a new scheme, like hunting for used Boeing 747s on social media, claiming he was going to buy 30 new 747-8s and rescue that program for Boeing, and even applying for a $15 million CARES Act airline bailout despite not having a qualifying payroll, let alone planes or FAA operating certification as a commercial airline.
Avatar Airlines also offered to take British Airways Boeing 747-400s being retired off the U.K. flag carrier’s hands in exchange for stock and suggesting they’d supplant American Airlines as BA’s U.S. domestic partner. Having gotten nowhere with asking BA to essentially donate a fleet of Boeing 747s – which would be flown by whom, and maintained how? – they moved on to pitch Thai Airways on the idea.
Now Avatar says they “plan[..] to be valued at” over $1 billion “before [their] first flight leaves the ground.”
- I’m not sure what it means to plan to be valued at a certain amount. I’ll leave that to the SEC.
- They’re not in any danger of having their first flight leave the ground before being valued at a billion dollars, since they’ve been trying to get flying for 30 years without success.
I couldn’t have said it better than their own press release, “[l]ike its operational plan, its financial plan is just as creative.”
They plan “two subsequent private equity offerings totaling $800mm and follow it with an IPO within three to five years.” They’re going for an $800 million raise and then an IPO at a billion dollar valuation? They want about a billion dollars without having incurred the expense of a single flight. Genius?
Avatar pitches its 30 year old plan with the argument “Why put new investment dollars into old deals and ideas?” Although they do have one valid point: since they aren’t an airline yet, they aren’t losing as much money as everyone else!
(HT: Cranky Flier)