Canada Jetlines has entered the first stage of a restructuring process under Canada’s Bankruptcy and Insolvency Act (BIA), less than a week after ceasing operations due to a lack of financing.
A notice of intention under the BIA permits Canada Jetlines to pursue a restructuring of its affairs and has the effect of imposing an automatic stay of proceedings, the airline said in a statement.
This will protect the company and its assets from claims and enforcement proceedings from creditors and “contractual counterparties,” the airline said.
The initial stay period is 30 days, but it may be extended by court order, per the statement.
Canada Jetlines, a self-described leisure carrier that began as a low-cost startup, announced Aug. 15, 2024, it had “temporarily” ceased operations until it could raise adequate financing.
This followed the exodus of several company leaders, including CEO Brigitte Goersch and chief operating officer Brad Warrant, along with several board members.
Cboe Canada has also suspended the trading of Canada Jetlines common and variable voting shares, the airline said.
“There is no certainty as to timing or likelihood that the shares will recommence trading on the Cboe,” said Canada Jetlines. “If within 150 days of the suspension date the suspension has not been lifted, the securities of the company will be automatically delisted without further notice.”
This is the latest in a series of disruptions to airline start-ups in Canada, particularly low-cost carriers that sought to improve competition and lower the cost of domestic air travel.
Discount carriers Swoop and Lynx recently shut down, and critics have pointed to a functional duopoly of national carriers they believe negatively impacts competition.
Air Canada is widely seen as the nation’s flag carrier, with WestJet as its main rival.
Swoop was absorbed into WestJet’s mainline operations in 2023, and WestJet also recently completed its acquisition of leisure carrier Sunwing Airlines.
Flair Airlines continues to operate as an ultra-low-cost carrier, and Porter Airlines remains a strong regional competitor, particularly among business travellers.
Air Transat offers leisure travel to several overseas markets, primarily Europe, the Caribbean, the East and West coasts of the U.S., South America and North Africa.
In a further sign of industry headwinds, WestJet announced it has downsized the number of active dedicated freighters in its WestJet Cargo network.
The airline had to ground about 10 percent of its passenger fleet due to hail damage at its base in Calgary, Alta., causing hundreds of flight cancellations.
Canada’s vast geography and small population base make it a challenging market for airline startups, though the Competition Bureau is pursuing a market study to gather data on the situation.
