Almost a 12 months in the past I wrote about 777 Companions, a Miami-based funding agency that has some suspicious investments in two airways. Particularly, the corporate owns Australia’s Bonza Airways and Canada’s Aptitude Airways.
Bonza Airways ceased operations days in the past, after its planes had been repossessed. With a lawsuit that has simply been filed, one can’t assist however surprise if Aptitude Airways might quickly face the same destiny. Understand that along with airline investments, 777 Companions has additionally been shopping for sports activities golf equipment, which might be extra attention-grabbing to the common particular person (although hopefully to not us). 😉
777 Companions accused of huge fraud scheme
For some background, I’d counsel studying a publish I wrote in July 2023, about 777 Companions’ suspicious airline investments. Lengthy story quick, the folks behind the funding agency confronted some critical accusations about their enterprise practices.
In line with a lawsuit on the time, 777 Companions was working a giant shell recreation. A former worker of the corporate even supplied the next insights into how 777 Companions operates:
“All these companies are dropping cash. Sport? Shedding cash. Aviation? Shedding cash. However who’s going to take the loss? The three way partnership companions. These guys play a shell-game. They declare to be self financed, to have put their very own cash into it. However they will’t have as a lot cash as they are saying they’ve. It’s simply not potential. However they don’t want some huge cash. As a result of what they actually do is shunt cash round. It’s an enormous shell recreation. The similar cash is at all times on the market doing one thing. And they’re operating it quicker and quicker.”
Nicely, the seriousness of those accusations has simply been taken to the following degree. As reported by The New York Instances, 777 Companions is now being sued by Leadenhall Capital Companions, a London-based asset administration firm. The lawsuit describes 777 Companions as “working an enormous shell recreation at greatest, and an outright Ponzi scheme at worst.”
The asset administration firm had supplied 777 Companions with greater than $600 million in financing, however found that round $350 million in belongings that served as collateral for loans had additionally been pledged to different lenders. One of many house owners of 777 Companions even acknowledged this occurred, calling it “an embarrassing mistake.”
Ah sure, positively an “embarrassing mistake.” Occurs to the very best of ’em, proper? The place there’s smoke there’s hearth, and it looks as if at this level the house owners of 777 Companions might have extra than simply monetary points on their arms. It’s type of superb what folks suppose they will get away with.
What does this imply for Aptitude Airways?
Regardless of 777 Companions claiming to be so properly funded, it’s attention-grabbing how the corporate’s airways have repeatedly had monetary points, together with plane repossession resulting from late lease funds. In fact that every one is smart now, and it’s most likely due to the shell recreation that 777 Companions is reportedly operating.
Bonza Airways has ceased operations, and I think about this newest replace might additionally affect the viability of Aptitude Airways. A couple of days in the past it was revealed {that a} portion of the shares of Aptitude had been acquired by an affiliate of Aptitude’s largest senior lender, offering new non-binding debt funding.
Particulars of this are restricted, because the firm isn’t publicly traded. Nevertheless, I can’t think about any approach that Aptitude might truly be worthwhile, given all that we all know. Canada is a brilliant powerful aviation market to start with, particularly for extremely low price carriers. I imply, remember the fact that one other Canadian extremely low price provider, Lynx Air, lately ceased operations.
Aptitude’s former VP of Finance claimed that 777 Companions primarily profited off of its airline investments by setting them as much as fail. 777 Companions had reportedly loaned Aptitude $129 million with an 18% rate of interest, and claimed that 777 Companions purchased 737 MAXs for $42 million, after which bought them to the airline for $52 million, pocketing a $10 million revenue.
If all of those accusations are true, then Aptitude’s price construction must be terrible, given its plane acquisition prices, financing prices, and extra. I can’t think about many outdoors buyers would need to are available and take over this airline, fairly than simply ranging from scratch.
Backside line
Whereas 777 Companions has confronted accusations of problematic enterprise practices for fairly a while, these accusations lately turned even worse. The corporate is now dealing with a lawsuit over pledging the identical collateral to a number of lenders.
Bonza Airways in Australia has ceased operations, and now we’ll see what the longer term holds for Aptitude Airways in Canada. The corporate’s largest lender has taken shares within the firm, however we’ll see if that’s sufficient to maintain Aptitude in enterprise.
What do you make of this 777 Companions scenario?
