In April 2021, the airline launched its brand, branding and image for the local market, but to date its start of operations has not materialized. It has already raised US$63,200.
After three years, since it launched its brand and image in April 2021 to enter the domestic market of Ecuador, Ecuatoriana Airlines is now looking for investors to complete its postponed entry.
It does so through the WeFunder portal, where it offers those interested to be part of the Founders Club with investments from US$250 to US$5,000.
Eduardo Delgado, CEO of Ecuatoriana Airlines, explained that this initiative is one of the company's several actions to attract investments and is part of a first round of financing with which the firm plans to attract investments for US$ 30 million in total and only by WeFunder US$3.5 million.
The airline reported that until now, the investment has been completely internal, with 100% its own financing.
The project on WeFunder was initially presented to Ecuadorians, however the platform within its process will later present the project to more than three million investors.
WHAT GUARANTEE IS THERE ON THE INVESTMENT?
Regarding support for investors, he assured that all investments in this portal are protected and monitored by the Security Exchange Commission (SEC) of the United States.
“Everything is regulated by the United States agency, and to clarify doubts and be very transparent about the investment, in the event that it does not happen, all the money will be returned to the investors. Each investor will receive a certificate at the time we close the campaign with a description of the shares they have or will accumulate,” Delgado explained.
He added: “All the documentation will be delivered to each investor, which will be the shares that will be generated by the American company that is Ecuatoriana Airlines INC, which is a corporation duly incorporated in the United States that will be the company that will generate the certificates of Actions".
Until June 2, according to Delgado, the platform registered 44 investors and the investment reached US$63,200.
“On the platform we have a ceiling where we can attract investment and it is US$5 million. Obviously, with the proceeds raised on this WeFunder platform, an airline cannot start operations, but it does allow it to prepare and move forward to attract larger investment,” he acknowledged. Slim.
WHY HAS THE PROJECT NOT TAKEN OFF?
Regarding the waiting time, from 2021 to date, to enter into operations, he said that “in April 2021 everything was going very well, we were even working with a very large company, KPMG, which made all the financial flow, the plan of business, among all the necessary requirements issued by the corresponding entities, but unfortunately several situations were latent such as the pandemic that had new different variants that unfortunately delayed the progress that we had achieved until then.
Added to this, according to Delgado, were several political and economic factors that happened in 2022, such as the indigenous strike, country risk, insecurity, among others. “All of this added up to the fact that investors retreated from their investment intention and did not want to invest in Ecuador... obviously an airline requires a fairly strong investment and when we went to try to get it, unfortunately no door was open to us.”
Meanwhile, after closing the early investment stage, the next step would be closing the final investment stage. Currently the valuation of the company is US$ 15 million and nine million shares, but for the first investors who will be part of the Founders Club the valuation has been lowered to US$ 13.5 million.
“When we reach the goal of US$124,000 we will close, and with this, the investors who participated will price their shares for more value, since the valuation will rise to US$15 million. All this information is very clear on the WeFunder website,” said Delgado.
And he revealed that the process for permission to operate involves four phases and the company has reached phase three. The last phase is the demonstration. “In this phase, investment is necessary, but we did not have the investors, we did not have the capital to acquire the aircraft and that is what we are doing right now, looking for investors, capital to be able to move forward.”
He indicated that with the capital available to Ecuatoriana Airlines they could acquire the planes they have reserved and bring them to Ecuador. “Additionally, we will have to resume the process from phase number one again, but this second time it would be a little more agile because everything is already done,” he said.
The airline contemplates the incorporation of six De Haviland Dash 8 Q400 aircraft in phases 1 and 2 of the plan, to be carried out over a period of 15 months from the start of operations, for which there is still no set date. Delgado predicts that if a significant investment comes in in about sixty days, operations could begin in the first quarter of 2025.
With the start of operations, the creation of 110 direct jobs and 300 indirect jobs is also contemplated.
ECUATORIANA AIRLINES AND ITS LINK WITH THE EXTINCT EQUATORIANA AVIATION
Regarding the similarity of the brand name with the defunct Ecuatoriana de Aviación, Delgado assured that “Ecuatoriana Airlines (created in March 2020) as a company already owns the brand and name of Ecuatoriana de Aviación. So, both airlines or names are under one umbrella. Ecuatoriana de Aviación and Ecuatoriana Airlines are from the same company,” he clarified.
Ecuatoriana de Aviación was founded in 1957 and in 1972 it passed to the State. In 1993 it went bankrupt and two years later it became a mixed company with 52% in private hands.
