Pogo Jet Gears Up For Takeoff Following IPO

By Brian Coyle Dow Jones Newswires

October 2, 2007

Private charter operator Pogo Jet Inc. aims to take flight after selling its first batch of shares to the public, relying on the experience of its management team to get initial operations aloft.

Pogo, which is preparing to sell up to $103.5 million in stock, plans to inaugurate its charter service in the first quarter of 2009. It expects to operate 25 jets by the end of that year and 100 by late 2011.

Today the company has no operations and won't generate any revenue until it starts flying. In the meantime, Pogo intends to rely on the deep airline-management experience in its ranks to attract customers, acquire aircraft and complete operational preparations. Its team is led by Robert Crandall, who served as chief executive of AMR Corp. (AMR), the parent of American Airlines, from 1985 to 1998.

Francis Gaskins, editor of IPOdesktop.com, sees Pogo as a start-up that's betting on Crandall's experience in putting together the contracts to sell the planes. "There's an opening in the market for what they're doing," he says, adding, "They will invite competition if they are successful."

Pogo anticipates using proceeds from its IPO to purchase its initial fleet of newly manufactured Eclipse 500 jets. These "very light jets" are a smaller, lighter class of aircraft, and less expensive to buy and operate than most private jets. The planes can fly about 500 miles before refueling, making them ideal for short "commuter" trips.

Pogo plans to conduct its public offering through WR Hambrecht & Co.'s OpenIPO process, under which the IPO price and allocation of shares will be determined by an auction.

In the current IPO environment, Gaskins said, Pogo "probably can't get a traditional underwriting done," so it must have "great projections to try and get a Dutch auction done." He also expects that the "current chaotic crisis in scheduled airline travel will open the door for the IPO, in terms of initial investor interest."

Pogo, of Chicopee, Mass., plans to offer its customers a private charter service that combines the operational practices of commercial airlines with the convenience provided by personalized charter services. It will compete with national and regional airlines as well as with other charter and private aviation providers.

In the very light jet, or VLJ, market, Pogo will compete primarily with DayJet Corp., which operates out of Florida, and LinearAir, based in Boston. It will also be up against fractional operators such as Warren Buffett's NetJets, which buys fleets of private jets and resells them to clients in the form of shares.

Pogo will initially serve the Northeast, mid-Atlantic, Ohio Valley and the Carolinas. Its target service area includes major metropolitan markets such as New York, Philadelphia, Washington, D.C., Boston, Cleveland, Cincinnati, Pittsburgh, Detroit, Toronto, Montreal and Charlotte, and their surrounding areas.

The company wants to combine the low purchase price and operating costs of its VLJs with intensive use of the planes to significantly lower the cost of private aviation. Pogo's online booking system will be designed so customers can quickly arrange a flight aligned to their schedules and needs. It will also use a network of smaller airports for its flights, enabling customers to bypass larger, more congested hubs, and avoid time-consuming security delays, as well as other travel-related hassles.

Pogo expects to offer its flying clientele lower prices and more-consistent service than other private charter services, while drawing fliers from both private and commercial aviation. It believes the limitations associated with each mode of air travel creates an opportunity for its "on-demand" service, and sees recent growth in private aviation as a positive sign.

According to the General Aviation Manufacturers Association, 1,939 twin-engine private jets were available for chartering in 2005, more than triple the 638 available in 2000. At the same time, annual on-demand charter hours flown by private jets jumped to 890,000 hours from 306,000 hours, reflecting travelers' growing dissatisfaction with other forms of air travel.

While Pogo's services may sound appealing, its earnings won't be on the rise for at least the next several years. For the six months ended June 30, the company reported a net loss of $800,000, widening from a $680,000 loss in the first half of 2006.

Pogo, which registered its IPO with the Securities and Exchange Commission on Sept. 13, plans to list its stock on the Nasdaq under the trading symbol POGO.