Practically a yr 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 could quickly face an identical destiny. Remember that along with airline investments, 777 Companions has additionally been shopping for sports activities golf equipment, which might be extra fascinating to the typical particular person (although hopefully to not us). 😉
777 Companions accused of large fraud scheme
For some background, I’d counsel studying a put up I wrote in July 2023, about 777 Companions’ suspicious airline investments. Lengthy story quick, the folks behind the funding agency confronted some severe accusations about their enterprise practices.
Based on a lawsuit on the time, 777 Companions was working an enormous shell sport. A former worker of the corporate even offered the next insights into how 777 Companions operates:
“All these companies are dropping cash. Sport? Dropping cash. Aviation? Dropping 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 attainable. 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 sport. The identical cash is all the time on the market doing one thing. And they’re working it sooner and sooner.”
Nicely, the seriousness of those accusations has simply been taken to the subsequent stage. 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 sport at greatest, and an outright Ponzi scheme at worst.”
The asset administration firm had offered 777 Companions with greater than $600 million in financing, however found that round $350 million in property 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 perfect of ’em, proper? The place there’s smoke there’s hearth, and it looks like at this level the house owners of 777 Companions could have extra than simply monetary points on their fingers. It’s form of superb what folks assume they will get away with.
What does this imply for Aptitude Airways?
Regardless of 777 Companions claiming to be so nicely funded, it’s fascinating how the corporate’s airways have repeatedly had monetary points, together with plane repossession on account of late lease funds. In fact that each one is sensible now, and it’s in all probability due to the shell sport that 777 Companions is reportedly working.
Bonza Airways has ceased operations, and I think about this newest replace may additionally affect the viability of Aptitude Airways. Just a few 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, for the reason that firm isn’t publicly traded. Nonetheless, I can’t think about any approach that Aptitude may truly be worthwhile, given all that we all know. Canada is a brilliant powerful aviation market to start with, particularly for extremely low value carriers. I imply, remember that one other Canadian extremely low value service, Lynx Air, just 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 value construction needs to 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 just lately turned even worse. The corporate is now going through 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?
