Toronto, Canada (AP by Tom Cohen)–Canada’s second-largest airline grounded its planes to disrupt travel plans of thousands of passengers Friday, hours after it was granted protection from creditors and said it would continue flying.
Canada 3000, which flew within Canada and to Europe, the Caribbean, Mexico and the South Pacific, issued a two-paragraph statement before dawn that said flying operations ceased on Friday.
“We are therefore unable to transport passengers to their destinations, and recommend that they seek an alternative means of travel,” the airline said.
No further information was immediately available. Calls to the airline’s head office were answered by a recorded message that flights had ceased.
Air Canada, the nation’s dominant airliner, said it was unaware of its rival’s pending shutdown.
“There were no previous arrangements made for Air Canada to accept Canada 3000 passengers’ tickets,” spokeswoman Laura Cooke said.
Britain’s Press Association reported Friday that passengers holding Canada 3000 tickets were stranded in three British airports.
In Vancouver, Bruce Harding had his family’s plans for a trip to Hawaii on Friday suddenly wiped out. An attempt to book last-minute flights with another airline was too expensive, he said.
“We’d have to pay up front,” he said. “We’ve already paid all of our money that we had to go on holiday.”
Canada 3000 was granted protection from creditors Thursday after failing to reach a deal with its unions that would have cut hundreds of jobs. It said it was losing $460,000 a day and was almost out of cash.
Judge John Ground of the Ontario Superior Court granted the temporary protection from creditors, allowing Canada 3000 to restructure its debt, cut its work force and negotiate with creditors while trying to formulate a survival plan.
“Delays in securing concessions essential to our restructuring have prompted the decision to seek the protection of the court,” Canada 3000 president Angus Kinnear said in a release Thursday, before the sudden shutdown. “This step allows us to continue serving the traveling public while restructuring our operations to ensure the long-term viability of Canada 3000.”
Canada 3000’s lawyers said the airline also was seeking Chapter 11 bankruptcy protection in the United States because the company has creditors in California.
“We’ve got a downturn in the economy and we’ve got the events of Sept. 11 and most recently the (decline) of the Canadian dollar, (which) affects this organization’s ability to pay some of its American lessors,” Bill Burden, a lawyer for Canada 3000, said at the court hearing Thursday.
Canada 3000 carries about 3 million passengers a year with a 38-aircraft fleet. Its fiscal 2002 first quarter results released in September, for the period ending July 31, showed a loss of $15.8 million Canadian compared to profit of $5.8 million Canadian in the same period the previous year.
Air Canada, by comparison, has more than 150 planes in service.
Turmoil in the Canadian airline industry dates back two years, when Air Canada fought off a hostile takeover bid and swallowed its main rival, Canadian Airlines, to become the nation’s dominant carrier.
Canada 3000 tried to fill the void by purchasing regional and charter airlines, but fell victim to the economic slowdown in North America exacerbated by the Sept. 11 terrorist attacks in the United States that has crippled the airline industry.
The Canadian government had agreed to a $50 million loan guarantee for Canada 3000, but rescinded it when the airline failed to present a business plan.
The government also has given financial help to Air Canada to offset losses from the Sept. 11 terrorist attacks in the United States that have crippled the North American airline industry.
Copyright © 2000 The Associated Press