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 such as Mexico, Jamaica and Florida.
However, the company quickly started accruing significant debts and struggled to find the necessary capital to cover them. In August 2024, the airline suddenly canceled all its remaining flights and told travelers who had booked them to pursue refunds through their credit cards because it would not be able to provide them while it sought alternative financing options.
Related: Another regional airline prepares to file for bankruptcy, cancels all flights
While the airline’s board of directors initially positioned the shutdown as a temporary measure, the final shoe dropped on Sept. 11 when Canada Jetlines made a voluntary assignment in bankruptcy and appointed BDO Canada Limited as the trustee overseeing the liquidation process. In total, the airline had racked up debts of $11.8 million CAD (roughly $8.7 million USD).
‘Unable to secure financing to continue with its proposal’
“On September 11, 2024 Canada Jetlines Operations Ltd. filed an Assignment in Bankruptcy after finding that it would be unable to secure financing to continue with its Proposal under the Bankruptcy and Insolvency Act,” BDO Limited said in a statement.
More on retail and bankruptcy:
Walmart store closing, auctioning off laptops and flat screen TVsHome Depot CEO sounds the alarm on a growing problemFamous restaurant files for Chapter 11 bankruptcy
This means that the airline has officially given up on its initial efforts to find new creditors and will now begin selling off assets to pay back the ones to which it owes debts. The largest 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 a few days later to not be associated with the downfall. Ultimately, the struggle came from both the difficulty of raising the necessary funds to keep a fleet of four leased Airbus A320-200 planes (EADSF) running, and maintaining an ultra-low-cost model that would win over customers from mainstream carriers like Air Canada (ACDVF) and WestJet.
Related: Get the best cruise tips, deals, and news on the ships from our expert cruiser
There is a reason why new airlines keep failing in Canada
A few months earlier in February 2024, fellow Canadian low-cost carrier Lynx Air also ceased its operations and filed for bankruptcy after facing challenges around the cost of running the business that the airline said were “too significant to overcome.”
“Every time a new player wants to enter the market, there’s only one certainty: they’re going to be losing money for the first eight, nine, 10 months at least and perhaps even more so you need a good bank account,” Jacques Roy, a professor of transport management at HEC Montreal business school, said to local outlet Global News back in August.
When it comes to Canada Jetlines, the liquidation process will involve selling off the assets the company had. According to BDO Canada, creditors will receive a letter describing the details of the bankruptcy in the coming weeks while several meetings to determine how debts will be met will be held in the coming months.
Dentons Canada LLP is serving as the legal counsel guiding Canada Jetlines through the bankruptcy and liquidation of assets.
Related: Veteran fund manager sees world of pain coming for stocks
