Canada's second largest airline Canada 3000, in a surprise move, ceased operations on Friday after securing court protection from creditors, stranding thousands of passengers and putting some 4,800 employees out of work.
The company had been trying to cut costs to secure a $75 million federal loan guarantee it needed to resolve a cash crunch triggered by the falloff in passenger travel after the September 11 attacks in the US.
'Canada 3000 Airlines regrets to advise that it will cease flying operation effective November 9, 2001,' the company said in a statement.
The move came as a shock after company had just won court protection from creditors and vowed to continue operations. It was not clear if the halting of operations is permanent.
Before ceasing operations, Canada 3000 said it wanted to cut some 1,500 employees and reduce capacity by 30%. Talks with union officials to achieve those cuts failed on Thursday, and later the airline sought and won court protection from creditors to allow it to restructure.
Court protection gives Canada 3000 a month to show it can keep its fleet afloat. The low-cost 38-plane carrier, which had revenues of $970 million for the 12-month period ending April 30, emerged as the number two airline in Canada after swallowing Royal Aviation Airlines and Can Jet earlier this year.
It already was having financial troubles incorporating the deals. Canada 3000 operates domestically and internationally, with flights to the US, Europe, the Caribbean, India and the South Pacific.
