Ultra low cost airline shuts down; won't refund fares

Bankruptcy filings by major airlines have not been a common occurrence in recent years. The last significant airline bankruptcy was Republic Airways Holdings' February 2016 Chapter 11 filing, which reported $3.5 billion in assets and $2.9 billion in liabilities. The next most significant Chapter 11 filing before Republic was American Airlines' Chapter 11 filing in November 2011.

Several smaller airlines have filed both Chapter 11 bankruptcy and Chapter 7 liquidation since the outbreak of the Covid-19 pandemic, including Western Global Airlines filing Chapter 11 protection in August 2023 and ExpressJet also filing Chapter 11 in August 2022.

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The Covid-19 pandemic coincided with other airline bankruptcies including Miami Air International's Chapter 11 on March 24, 2020, Trans States Airlines' Chapter 7 on April 1. 2020, Compass Airlines' Chapter 7 on April 5, 2020, and RavnAir Group's Chapter 11 on April 5, 2020, according to airlines.org.

And now financial distress has pushed a North American air carrier into insolvency and out of business in 2024.

Lynx Air shutters operations and will wind down 

Canada-based ultra low-cost airline Lynx Air on Feb. 22 obtained an initial order for creditor protection from the Court of King's Bench of Alberta under the Companies' Creditors Arrangement Act with plans to shut down all operations on Feb. 26 and wind down its business.

Under a CCAA filing in Canada, a company is considered to be insolvent but not bankrupt. The initial order for creditor protection also provides Lynx Air with a stay of all legal proceedings against the airline during the CCAA process.

The Calgary, Alberta, airline is also seeking approval of a $1 million interim credit facility from Indigo Northern Ventures to finance working capital, general corporate purposes and capital expenditures, according to court papers.

The company listed C$429 million ($317.8 million) in assets and C$599.8 million ($444.3 million) in liabilities in its filing.

Lynx Air, which provides low-cost airline service throughout Canada and to certain airports in the U.S. and Mexico, said that over the past year it has faced significant headwinds, including rising operating costs, high fuel prices, exchange rates, increasing airport charges, and a difficult economic and regulatory environment, according to a company statement.

In February, the airline received four notices of default from creditors: C$351,688 owed to Calgary Glycol Facilities Corp. on Feb. 1, C$1.63 million owed to Aeroports de Montreal on Feb. 2, C$2.44 million owed to Greater Toronto Airports Authority on Feb. 16, and C$2.19 million owed to Delta Air Lines on Feb. 17, according to court papers. 

The fledgling airline began air service on April 7, 2022 and currently flies nine Boeing 737 Max 8 aircraft to 18 destinations in Canada, U.S. and Mexico. 

The air carrier said that in connection with commencement of its CCAA proceedings, it will continue operating flights until it ceases operations effective 12:01 a.m. Mountain time on Feb. 26.

Airline says contact credit card companies for refunds

While the airline said that "Every effort is being made to assist passengers at this time," the airline will not refund prebooked airline tickets. Lynx Air is recommending that passengers with existing bookings contact their credit card companies to secure refunds on prebooked travel.

Lynx Air employs about 500 workers, according to court papers. The Canada Industrial Relations Board on June 3, 2023, certified Air Line Pilots Association, International, as bargaining representative for Lynx Air's pilots, and the board on Feb. 7, 2024, certified the Canadian Union of Public Employees to represent cabin crew, court papers said.

“We are devastated for our members at Lynx and all the employees who lost their jobs today. While this is a hard day for the employees of Lynx, they are better off for belonging to Canada’s largest union. CUPE will represent them and defend their rights in these difficult times. We will fight to ensure the employees get everything they are legally entitled to,” the union's National President Mark Hancock said in a statement.

CUPE represents 240 flight attendants at the airline, according to the statement.

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