CANADA'S second largest airline, Canada 3000, which operated a weekly charter service to Montego Bay, reportedly ceased flying yesterday because of increased financial problems following the September 11 terror attacks in the United States. A representative for Canada 3000, from the airline's local agent, AJAS, was unavailable for comment yesterday on the implications of the shutdown for the local industry.
However, an employee of AJAS said flights, which used to come to Jamaica once or twice weekly, would no longer be coming here.
Canada 3000's planes were grounded just hours after it was granted bankruptcy protection from creditors, according to a newspaper report on the Globe and Mail Web site.
The report quoted Canada's Transportation Minister, David Colnette, as telling Parliament yesterday that negotiations were under way with a view to getting Canada 3000 planes back into the skies.
According to the report, just before midnight on Thursday, Canada 3000 issued a statement saying it was ceasing all operations and recommended that passengers seek alternative means to travel.
An Associated Press report out of Toronto had earlier said Canada 3000 was granted bankruptcy protection from creditors after failing to reach a deal with its unions that would have cut hundreds of jobs and helped the struggling carrier get over a looming cash crisis.
It said the battered airline, which was losing about Cdn$700,000 a day and had only a week or two of cash left, was granted protection by a Toronto court under the federal Companies' Creditors Arrangement Act.
The Act -- used by troubled companies such as Eatons, Algoma Steel, Dylex and others -- allows the airline to restructure its debt, cut its workforce and negotiate with creditors while it tries to come up with a long-term survival plan.
Judge John Ground of the Ontario Superior Court granted Canada 3000 interim protection from its creditors late Thursday, but that order will be reviewed in a week due to the hasty filing.
As well, Canada 3000 said it is also seeking Chapter 11 protection in California since the company has creditors in that U.S. state.
"We've got a downturn in the economy and we've got the events of September 11 and most recently impact of the Canadian dollar (which) affects this organization's ability to pay some of its American lessors," Bill Burden, a lawyer for Canada 3000 told the court late Thursday.
Mr. Burden said negotiations with various creditors and the government are continuing.
Lawyers for Canada 3000's creditors told the court they needed the review period because many of them had not yet had time to closely examine the company's court submissions.
In Ottawa, Mr. Collenette said the filing for bankruptcy protection allows Canada's second-biggest airline "to restructure itself and be free from legal obligations to creditors."
Mr. Collenette said he's expecting Canada 3000 to now come back to Ottawa with a new business plan to try to obtain new loan guarantees. A few weeks ago, the Government had agreed to a $75-million loan guarantee for the struggling carrier, but the airline failed to meet conditions set by Mr. Collenette, including presenting a viable business plan to keep the carrier operating in the black.
Under the court filing, Canada 3000 would continue to fly while the company negotiated with creditors. That's good news for the 9,000 or so passengers the carrier flies every day to destinations across Canada and abroad.
