Business

Canadian travel firm FlightHub seeks creditor protection

Montreal-based travel firm FlightHub is seeking protection from its creditors amid the COVID-19 pandemic that has wiped out demand for travel.

COVID-19 pandemic has virtually wiped out demand for recreational travel

FlightHub booked $3 billion worth of vacation packages last year, serving five million customers, the company says. (Michael Probst/The Associated Press)

Montreal-based travel firm FlightHub is seeking protection from its creditors amid the COVID-19 pandemic that has wiped out demand for travel.

The company operates two main brands, FlightHub in Canada and JustFly in the U.S.

Founded in Montreal in 2012, the company has grown to become a major player in the travel industry, selling more than $3 billion worth of vacation packages to five million customers last year. The company works with more than 200 airlines, and makes money by getting a cut of every ticket sale the airlines get from their booking platform.

Just as airlines have been hit hard by the collapse in demand for travel caused by COVID-19, so has FlightHub.

The company filed for protection from its creditors under the Companies' Creditors Arrangement Act, the section of Canadian law that deals with insolvent companies.

In court filings, the company says it turned a profit in each of the past three years, until the COVID-19 pandemic, which it described as "catastrophic" to its business. Travel restrictions have caused revenues to plummet by more than 90 per cent in just two months, and the company lost $8 million in the first quarter of 2020.

The losses show no sign of dissipating, either.

"In addition to the significant reduction in revenues from new reservations, many of the previous reservations made by customers prior to the COVID-19 outbreak have been cancelled, leading to a significant loss in previously recorded revenues," FlightHub said.

Filings show the company owed $15 million to its various suppliers at the end of April. At the same time, the company said it had roughly $6.4 million to its name in cash and accounts receivable.

The company says it has recently laid off about half of its staff in Montreal and 90 per cent of its U.S.-based employees. In total, that's 108 jobs cut from its previous work force of 200 people — 180 in Canada and 20 in the U.S.

The company has come under fire in recent years from some of its customers, which led to investigations from Canada's competition watchdog and the Better Business Bureau, culminating in a lawsuit in a California court over fees and marketing practices.

 

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