Canada Jetlines has suspended all flights and is temporarily ceasing operations due to a financial crisis within the company.
The airline said Thursday it has been unable to raise the capital needed to continue flying and plans to seek protection from creditors.
“The company […] “The Company has explored all available financing alternatives, including strategic transactions and equity and debt financings. Unfortunately, despite these efforts, the Company has been unable to secure the financing necessary to continue its operations at this time,” spokeswoman Erica Dymond said in a statement.
The company says passengers with a flight reservation should contact their credit card company for a refund. “Every effort is being made to assist passengers at this time.”
On Monday, Canada Jetlines President and CEO Brigitte Goersch and executives Ryan Goepel, Beth Horowitz and Shawn Klere resigned, signaling the worst.
Difficult market
It is another airline failure after the closure of Lynx Air and low-cost carrier Swoop over the past year.
“Every time you lose a little bit of competition in the Canadian market, it’s a little sad for travellers, because it puts less pressure on prices,” said Jacques Roy, professor of transportation management at HEC Montréal.
Canada Jetlines represented only a fraction of flights to sun destinations, he said. Until Thursday, the company was flying a few dozen flights a month from Toronto to Miami and Orlando, Fla., and Cancun, Mexico, according to aviation tracking company Cirium.
The closure highlights the challenges of running an airline in a vast country with a scattered population and only a few air travel hubs.
“Whenever a new player wants to enter the market, there is only one certainty: it will lose money for the first eight, nine, ten months at least, and maybe even more. So you need a good bank account,” Roy explained, noting that leisure travelers are particularly sensitive to prices.
“The major players will play the competition game. And if you cut your rates below your cost, that’s a recipe for failure in the short term,” he continued. “It’s a tough market.”
The company’s shares on Cboe Canada were suspended Wednesday afternoon.
Difficult beginnings
Canada Jetlines, which has struggled to get many planes off the ground since its inaugural flight in September 2022, faced a series of problems before this week’s turbulence.
In October 2019, the Mississauga, Ontario-based company announced it was delaying its planned December launch and laying off most of its employees after failing to secure funding and losing investment partners.
In January 2023, Canada Jetlines paused its domestic routes to refocus on sun destinations and aircraft leasing, but said at the time that it intended to resume domestic flights in the fall of that year.
On June 30, 2024, Eddy Doyle resigned from his position as President and CEO, which he had held since 2021.
The latest setback comes after seven years of fundraising and despite Ottawa raising the international ownership cap for Canadian airlines from 25% to 49% in 2018, allowing for a broader pool of investors.
Canada Jetlines lost $14.2 million between March 2023 and March 2024, despite making a profit in one of the quarters, according to financial filings. Its quarterly revenues were between $8 million and $12 million.
In May, the company secured a $2-million loan from Square Financial Investment, a Mississauga-based firm owned by Canada Jetlines board member Reg Christian, who was named executive vice-president following the move. The loan is one of several Canada Jetlines has taken out in the past two years.
As recently as May 10, the company said in its financial statements that it plans to grow to seven aircraft by the end of the year and 15 aircraft by 2026.