boston.com Business your connection to The Boston Globe
Boston Capital

Is IPO flight of fancy?

Can a turkey fly?

It certainly can try, especially when we're talking about a young company pitching big plans to public investors. Consider Pogo Jets Inc. and its planned initial public stock offering.

Pogo Jets exists in Chicopee but doesn't have any real operations to speak of so far. It is a developing business that should be seeking venture capital investors instead of public stockholders right now.

Pogo is among a few companies trying to capture the excitement and potential for new Very Light Jets, or VLJs, that are much cheaper to purchase and operate than other aircraft used by the private jet set.

The idea: make private air travel available to more people with lower prices. But customers won't confuse the much smaller VLJs with a Gulfstream.

Pogo plans to deploy a fleet of Eclipse 500 very light jets in an air-taxi service (it prefers "on-demand charter") for Boston and 10 other big metropolitan areas in a geographic triangle from Charlotte to Detroit to Montreal.

Pogo has some well-known names behind its venture. It was created a few years ago by chief executive Bob Crandall, the former chief executive of American Airlines parent AMR Corp., and Donald Burr, who ran the popular low-budget carrier People Express in the 1980s.

Famous investor Julian Robertson and Richard Gilder of Gilder, Gagnon, Howe & Co. have provided most of the deep pockets so far.

They skipped underwriting by investment bankers and went to WR Hambrecht & Co. to run their planned IPO as an auction. The fund-raising target: as much as $103 million.

Pogo doesn't have any profit but, then again, it doesn't have any revenue. In fact, it doesn't have any aircraft yet.

Once Pogo acquires its Eclipse 500 jets, no one knows how potential passengers will respond or how VLJ technology will perform in everyday commercial use.

"It's very unusual, extremely unusual, to see an IPO for a service concept and a company that have both been totally untested," says aviation analyst Richard Aboulafia of the Teal Group.

Analyst Vaughn Cordle of the consulting firm AirlineForecasts has looked over Pogo plans and doesn't like what he saw. "It's a bust of a business idea," he says.

Cordle can tick off a list of problems with the Pogo plan: bad economics, aircraft reliability questions, and lack of an existing service center. He ranks Pogo atop several companies exploring similar strategies, but only because of Crandall's experience and reputation.

Pogo has been a service company waiting for technology to catch up with its plans. Manufacturers started shipping very light jets like the Eclipse 500 only this year.

Pogo wants to inaugurate service in 2009 and operate 25 very light jets by the end of that year, using Westover Metropolitan Airport in Chicopee as its hub. It hopes to operate a fleet of 100 aircraft by 2011.

The Eclipse 500 jet seats five, and Pogo plans to use two pilots on every flight, leaving room for three passengers. Scott McCartney tested three very light jets for the Wall Street Journal last fall and described the Eclipse 500 like a sports car, very nimble but cramped.

The jet's interior has 20 percent less space than a Honda Odyssey minivan's. If you end up in the third passenger seat, "it will remind you of sitting on a floor cushion at a Japanese restaurant," McCartney wrote. Oh, and this: There's no bathroom on the plane.

Pogo Jet is an idea still too far ahead of its time for commercial success. But it can offer investors the chance to throw their money out a window from an exceptionally great height.

BOSTON CAPITAL BLOG Steven Syre is a Globe columnist. Read his daily blog at boston.com/business. He can be reached at syre@globe.com.

More from Boston.com

SEARCH THE ARCHIVES