Canada Jetlines grounds all flights, plans to file for creditor protection

Canada Jetlines is grounding all flights and says it is temporarily ceasing airline operations effective immediately, making it the latest carrier to signal distress within Canada's troubled commercial airline industry.

The airline,which flew mainly to sun destinations out of Toronto, said Thursdayit has been unable to find the capital needed to stay afloat and plans to file for creditor protection.

"The company ... pursued all available financing alternatives including strategic transactions and equity and debt financings," said spokeswoman Erica Dymond in a release.

"Unfortunately despite these efforts, the company has been unable to obtain the financing required to continue operations at this time."

Passengers with existing bookings should contact their credit card company to secure refunds, the company said."Every effort is being made to assist passengers at this time."

The shutdown follows the resignation of four executives on Monday, including CEO Brigitte Goersch.

It marks yet another airline departure from Canadian skies after the closure of Lynx Air and budget carrier Swoop within the past year.

Canada Jetlines, which is headquartered in Mississauga, Ont., serves Canadians flying within the country or to destinations in the U.S., Caribbean and Mexico.It launched its first flight in September 2022.

The carrier provides charter flights to sports teams and companies and leases its fleet to other carriers in the summertime. Its former CEO Eddy Doyle characterized it as leisure airline, thoughit was originally conceived as an ultra low-cost carrier.

That business model was ultimately shelved, partly because the starting price for discount carriers in Canada "is composed of a lot of taxes," and partly due to the challenges ofcompetingwith Air Canada and WestJet, Doyle told CBC News in February.

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Calgary-based, low-cost airline Lynx Air has ceased operations, citing rising costs among reasons for the closure. McKenzie McMillan, a travel consultant with The Travel Group, tells BC Today host Michelle Eliot that Canadian airlines struggle more than their U.S. counterparts because fewer people travel longer distances between urban areas.

At the time, Doyle said he thought there was "enough supply there to meet demand for the Canadian travelling public," with Air Canada, WestJet and Air Transatback at full-strength following the disruptions prompted by the COVID-19 pandemic.

But he added that any new entrants would be fighting for the same portion of the market.

Canada Jetlines, which has struggled to get more than a handful of planes off the ground since its inaugural flight in September 2022, faced a series of hiccups even before this week's turbulence.

Even its initial launch, announced for December 2019, was postponed when company announced that fall it waslaying off most employees after failing to secure the required financing and losing investment partners.

In January 2023, Canada Jetlines pressed pause on domestic routes as the carrier refocused on sun destinations and leasing its planes, but said at the time it aimed to resume in-country flights that fall.

That setback came after seven years of fundraising and despite Ottawa lifting the foreign ownership ceiling on Canadian airlines to 49 per cent from 25 per cent in 2018, allowing for a wider pool of investors.

Canada Jetlines lost $14.2 million over the 12 months between March 2023 and last March, despite eking out a profit in one of the quarters, according to financial filings. Quarterly revenues ranged between $8 million and $12 million.

In May, the company secured a $2-million loan from Square Financial Investment Corp., a Mississauga-based holding company owned by board member Reg Christian, who was named executive vice-president as a result. The loan is one of several taken out by Canada Jetlines over the past two years.

As recently as May 10, the company said in financial statements it planned to grow to seven planes by year's end and 15 aircraft by 2026.

And in June, Doyle announced his retirement three-and-a-half years after joining the company. Goersch then took over as chief executive.

'It's a sign of the times'

Aviation expert John Gradek told CBC News that the airline had "been on the edge for months."

"When you look at their pattern of operations and their pattern of funding ... to me it was a surprise that they didn't get their licence pulled by TransportCanada earlier," said Gradek.

"These guys had six airplanes and a couple hundred people, and they were just going month-to-month, trying to scramble and get as much cash as they possibly could to meet the payroll and the lease cost on the airplane[s]," Gradek said.

He said it was only a matter of hours after the executive exodus on Monday that the airline would collapse.

"It's a sign of the times. We have a problem in terms of commercial aviation in Canada," Gradek added.

"People were spending five, six, $700 to buy a ticket on an airline that, in my opinion, was on pretty shaky ground. That, to me, is a failing of our transportationpolicy [and] practices."

Trading of company shares on the NEO Exchange was halted late yesterday afternoon.