Bankrupt regional airline starts liquidation process

Starting a new airline is inherently a risky endeavor. In September 2022, the new Ontario-based carrier Canada Jetlines launched its inaugural flights, shuttling tourists from the east coast of Canada to sunny vacation destinations akin to Mexico, Jamaica and Florida.

Nevertheless, the corporate quickly started accruing significant debts and struggled to locate the necessary capital to cover them. In August 2024, the airline without warning canceled all its remaining flights and told travelers who had booked them to pursue refunds through their bank cards since it'd now not have the flexibleness to offer them while it sought alternative financing options.

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While the airline's board of directors at the start positioned the shutdown as a brief measure, the ultimate shoe dropped on 9/eleven when Canada Jetlines made a voluntary assignment in financial disaster and appointed BDO Canada Limited because the trustee overseeing the liquidation process. In total, the airline had racked up debts of $eleven.Eight million CAD (roughly $Eight.7 million USD).

'Unable to secure financing to continue with its proposal'

"On 9/eleven, 2024 Canada Jetlines Operations Ltd. filed an Assignment in Financial disaster after finding that it should perchance be unable to secure financing to continue with its Proposal below the Financial disaster and Insolvency Act," BDO Limited said in an announcement.

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Which implies the airline has officially given up on its initial efforts to locate new creditors and can now start off selling off assets to pay back the ones to which it owes debts. The biggest bills are owed to tech and aviation companies like Smart AMS, Corendon Dutch Airlines 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 back in August, three executives and CEO Brigitte Goersch resigned about a days later to now not be related to the downfall. In a roundabout way, the struggle came from both the problem of raising the necessary funds to keep a fleet of four leased Airbus A320-200 planes (EADSF) running, and declaring an ultra-low-cost model which can win over customers from mainstream carriers like Air Canada (ACDVF) and WestJet.

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There will likely be a explanation why new airlines keep failing in Canada

Some months earlier in February 2024, fellow Canadian low-cost carrier Lynx Air also ceased its operations and filed for financial disaster after facing challenges around the price of running the business that the airline said were "too significant to conquer."

"Each time a new player wants to enter the market, there's most effective one sure bet: they’re going to be losing money for the primary eight, nine, 10 months now not lower than and even possibly more so which you'd like a fine checking account," Jacques Roy, a professor of transport management at HEC Montreal business school, said to local outlet Global News back in August.

With regards to Canada Jetlines, the liquidation process will involve selling off the assets the corporate had. In keeping with BDO Canada, creditors will receive a letter describing the details of the financial disaster inside of the coming weeks while a couple of meetings to examine how debts will likely be met will likely be held inside of the coming months.

Dentons Canada LLP is serving because the legal counsel guiding Canada Jetlines at some point of the financial disaster and liquidation of assets.

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