Canada Jetlines has announced the immediate suspension of all flights, signalling its intent to seek creditor protection after failing to secure the financial backing necessary to continue operations.
The airline, which primarily operated flights from Toronto to popular sun destinations, revealed on Thursday that it has been unable to raise the capital needed to stay in the air.
“The company … pursued all available financing alternatives including strategic transactions and equity and debt financings,” said spokeswoman Erica Dymond in a statement. “Unfortunately, despite these efforts, the company has been unable to obtain the financing required to continue operations at this time.”
The sudden shutdown comes just days after the resignation of four key executives, including CEO Brigitte Goersch, and marks another casualty in Canada’s struggling airline industry, following the recent closures of Lynx Air and budget carrier Swoop.
Headquartered in Mississauga, Ontario, Canada Jetlines began operations in September 2022, catering to Canadians travelling domestically and to destinations in the United States, Caribbean, and Mexico. The airline also provided charter services for sports teams and companies and leased its fleet to other carriers during peak seasons.
Originally conceived as an ultra-low-cost carrier, Canada Jetlines shifted its business model after struggling to compete with larger players like Air Canada and WestJet. Former CEO Eddy Doyle noted earlier this year that the high tax burden on discount airlines in Canada and the fierce competition with established carriers made the ultra-low-cost model untenable.
Despite plans announced in May to expand its fleet to seven aircraft by the end of the year and 15 by 2026, the airline has struggled to stay afloat, losing $14.2 million over the past year despite some quarterly profits. The company had secured several loans, including a $2 million loan in May from Square Financial Investment Corp., but these measures were not enough to stave off its current financial woes.
Aviation expert John Gradek commented on the airline’s precarious situation, stating, “When you look at their pattern of operations and their pattern of funding … it was a surprise that they didn’t get their licence pulled by Transport Canada earlier.”
Gradek suggested that the airline’s collapse was imminent following the recent executive departures, adding, “It’s a sign of the times. We have a problem in terms of commercial aviation in Canada.”
Passengers with existing bookings have been advised to contact their credit card companies to secure refunds. Canada Jetlines assured customers that every effort is being made to assist them during this difficult time.
Trading of Canada Jetlines shares on the NEO Exchange was halted late yesterday afternoon as the company moves forward with its plans for creditor protection.