DALLAS — On September 11, 2024, the ultra-low-cost carrier (ULCC) Canada Jetlines (AU) issued an official press release announcing its bankruptcy status. 

This is not good news for the Canadian airline market since this is the third LCC to declare bankruptcy in the last year. In 2023, budget airlines Lynx Air (Y9) and SWOOP (WO) ceased all operations, ending their experience in the Canadian airline landscape. 

Canada Jetlines ended its venture after almost two years of service. The first flight, on October 22, 2022, connected Toronto Pearson (YYZ) to Calgary (YYC). Since its inception, the airline has pitched itself as a ULCC, adopting a business model that has not been very successful. 

Downfall

Canada Jetlines' slope to bankruptcy begins in May 2024, when the company obtains a bank loan of about C$2 million to meet cash shortfalls needed to pay government taxes. 

The following month, June, the area company applied for and obtained another loan of C$2 million, again to bridge financial liquidity shortfalls. These shortfalls are justified by the profit loss incurred in the May 2023-May 2024 time frame, estimated at more than C$14 million.

The situation came to a head on August 15, 2024, when AU's operations ceased following the resignation of CEO Brigitte Goersch and three other management members. Passengers were immediately warned, and through a press release, they were asked to contact their credit card institutes to obtain full refunds of their ticket purchase costs.

Current Status

Following Goersch's resignation, Eddy Doyle, the new CEO, declared AU unable to sustain its operations financially and stated to the Travel Industry Council of Ontario that the airline and associated travel agency were bankrupt. 

Canada Jetlines was officially declared bankrupt on September 11, 2024, due to a lack of financial liquidity and the suspension of operations on August 15, 2024. 

Many academics and industry figures have expressed their opinions regarding the case of Canada Jetlines (AU), among them John Gradek—a lecturer in the Aviation Management course at McMill University—who argued that the company had not been on the edge of bankruptcy for a year and that the recent events are merely the development of a pre-existing situation. 

Gradek also claims that the disappearance of many Canadian LLCs is due to the need for more specific financial controls during the licensing process; in fact, more verifications would be necessary to verify an airline's good and sound financial situation before licensing and the start of operations.

Jacques Roy, professor at the Montreal Business School, also expressed his view of the situation, stating that the Canadian airline market is extremely insidious given the presence of two preponderant airlines-Air Canada (AC) and Westjet (WS)-that have dominated the market for many years now. 

The Canadian air market has some problems, given the untimely demise of three airlines in one year. This is also supported by TICO itself, which, in the wake of recent events, has initiated a study program aimed at analyzing the situation and understanding how it can be improved. 

Further sources: aerotime.aero, financialpost.com, globalnews.com, planespotters.net