Beginning a brand new airline is inherently a dangerous endeavor. In September 2022, the brand new Ontario-based service Canada Jetlines launched its inaugural flights, shuttling vacationers from the east coast of Canada to sunny trip locations comparable to Mexico, Jamaica and Florida.
Nevertheless, the corporate rapidly began accruing important money owed and struggled to search out the required capital to cowl them. In August 2024, the airline all of the sudden canceled all its remaining flights and advised vacationers who had booked them to pursue refunds by their bank cards as a result of it could not have the ability to present them whereas it sought different financing choices.
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Whereas the airline’s board of administrators initially positioned the shutdown as a brief measure, the ultimate shoe dropped on Sept. 11 when Canada Jetlines made a voluntary project in chapter and appointed BDO Canada Restricted because the trustee overseeing the liquidation course of. In whole, the airline had racked up money owed of $11.8 million CAD (roughly $8.7 million USD).
‘Unable to safe financing to proceed with its proposal’
“On September 11, 2024 Canada Jetlines Operations Ltd. filed an Project in Chapter after discovering that it could be unable to safe financing to proceed with its Proposal beneath the Chapter and Insolvency Act,” BDO Restricted mentioned in an announcement.
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Which means the airline has formally given up on its preliminary efforts to search out new collectors and can now start promoting off belongings to pay again those to which it owes money owed. The biggest payments are owed to tech and aviation firms like Good AMS, Corendon Dutch Airways and Future Bookings. The airline’s debt to the latter is $1.19 million CAD or roughly $876,000 USD.
When the airline ceased operations again in August, three executives and CEO Brigitte Goersch resigned just a few days later to not be related to the downfall. In the end, the battle got here from each the problem of elevating the required funds to maintain a fleet of 4 leased Airbus A320-200 planes (EADSF) working, and sustaining an ultra-low-cost mannequin that may win over prospects from mainstream carriers like Air Canada (ACDVF) and WestJet.
There’s a motive why new airways hold failing in Canada
Just a few months earlier in February 2024, fellow Canadian low-cost service Lynx Air additionally ceased its operations and filed for chapter after going through challenges round the price of working the enterprise that the airline mentioned had been “too important to beat.”
“Each time a brand new participant desires to enter the market, there’s just one certainty: they’re going to be shedding cash for the primary eight, 9, 10 months at the least and maybe even extra so that you want an excellent checking account,” Jacques Roy, a professor of transport administration at HEC Montreal enterprise college, mentioned to native outlet World Information again in August.
In terms of Canada Jetlines, the liquidation course of will contain promoting off the belongings the corporate had. In keeping with BDO Canada, collectors will obtain a letter describing the main points of the chapter within the coming weeks whereas a number of conferences to find out how money owed might be met might be held within the coming months.
Dentons Canada LLP is serving because the authorized counsel guiding Canada Jetlines by the chapter and liquidation of belongings.
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