Canada's second-largest airline, Canada 3000, which abruptly halted operations two days ago, was placed into bankruptcy last night and its board of directors has resigned.
Ontario Superior Court Justice authorised and directed the accounting firm Deloitte and Touche to 'make assignments in bankruptcy', according to a statement from the company.
Canada 3000, which had secured court protection from creditors on Thursday, had been trying to find private investors to help avert its cash crisis, which was exacerbated by a steep fall-off in air travel following the September 11 attacks in the US. The appointment of Deloitte and Touche was a clear sign that the 13-year-old airline could not turn its financial troubles around in the short term.
Thousands of passengers worldwide were left stranded on Friday when Canada 3000 abruptly grounded its 38-plane fleet, some of which were being seized at Canadian and foreign airports. The Canadian government had pledged a $75 million loan guarantee to Canada 3000, but refused to deliver the funds unless the firm produced a viable business plan.
Union talks to help the airline reduce its 4,800-strong workforce by some 1,500 jobs - an effort to meet requirements for the government loan - failed on Thursday, leading Canada 3000 to seek court protection from its creditors.
Aside from passenger falloff, the Toronto-based discount carrier's cash crisis resulted in part from paying some $89 million to purchase two smaller airlines - Royal Aviation and CanJet Airlines. It says it was also hampered by the introduction of Air Canada's discount carrier Tango, which offered similar routes at lower prices.
