Greyhound Reaches Agreement With Kelowna Flightcraft
May 16, 2008 | General
CALGARY, February 11, 1996 — Greyhound Lines of Canada Ltd. announced today it has reached an agreement with Kelowna Flightcraft Air Charter Ltd. of Kelowna, B.C., that will provide the opportunity to link Greyhound’s existing bus service with Kelowna Flightcraft’s air network. Canadians will have the opportunity to travel across Canada through one low cost intermodal system using ground or air transportation, or a combination of both.
The new air service, to be named Greyhound Air, will be operated by Kelowna Flightcraft using a fleet of up to six Boeing 727-100 aircraft which will be added to Kelowna Flightcraft’s existing fleet of 24 aircraft. Kelowna Flightcraft currently has over 450 employees. “The contract with Greyhound makes good business sense for us,” stated Barry Lapointe, Kelowna Flightcraft’s president. “We already service a major national account using the same type of aircraft requiring a service base I n many of the same centres Greyhound Canada wants us to offer to its passengers. This will allow us to be very efficient for Greyhound Canada and for our other customers by making even better use of our maintenance facilities in Kelowna and Hamilton,” he said. Greyhound Canada will not have any ownership interest in the aircraft or air operations but will handle all marketing and sales activities for the operation.
The new air service will be a price leader. Kelowna Flightcraft believes it will have the lowest scheduled air service operating costs in Canada. By using Greyhound Canada’s existing infrastructure to provide booking and check-in services the low cost base will permit very competitive air fares. Greyhound Canada’s existing infrastructure currently serves over 5 million passengers a year through more than 600 agents. With Kelowna Flightcraft providing the airplanes and the flight operations on a cost plus basis, Greyhound Canada’s share of total startup costs is expected to be less than $10 million, and it will have limited ongoing downside financial risk.
“For 66 years Greyhound has been synonymous with economical travel in Canada,” said Dick Huisman, Greyhound Canada’s president. “We are simply recognizing the value Canadian travelers place on their time by providing all of the qualities they value in bus travel – reliability, flexibility, low cost, but getting them there faster. We believe that, together with Kelowna Flightcraft, we are fundamentally changing passenger transportation in Canada,” he said. There will be up to two flights each day which will link Vancouver, Kelowna, Calgary, Edmonton, Winnipeg, Ottawa, Toronto and Hamilton, with Winnipeg as the hub. Every flight, every day, the air service will offer low fares with flexibility to change travel plans.
Details regarding launch of the new service and fares will be released in March 1996 with air service expected to commence in the second quarter.
Greyhound is currently 69% owned by The Dial Corp. of Phoenix, Arizona. As previously announced, Greyhound has developed a restructuring proposal designed to separate its inter-city bus transportation business from the hotel and tour business carried on by its subsidiary, Brewster Transport Company Limited. Under the proposal, if it receives the required level of shareholder approval, the Greyhound inter-city bus business would cease to be controlled by Dial and would become approximately 6% publicly held. The proposal is still under review by Dial and the timing of the restructuring, if it proceeds, remains uncertain.
The air service initiative is not conditional upon the proposed restructuring.
Greyhound serves 1100 communities throughout Canada. Greyhound Lines of Canada Ltd.’s common shares trade on The Toronto Stock Exchange, symbol GHL.
FOR FURTHER INFORMATION
John Munro, Executive Vice President, Greyhound Lines of Canada Ltd.: (780) 260-4619
Bruce Elmore, Sr. V.P. Finance & C.F.O., Greyhound Lines of Canada Ltd.: (780) 260-0750